Key points

• Crypto enters a vicious bear market for a year
• It was also the first time that cryptocurrency suffered a bear market in the broader economic development
• Because there are many negative macroeconomic variables and the zero interest rate period has ended, it seems naive to think that cryptocurrency can rebound significantly in a short time

All those who bet on the rapid recovery of the encryption market will probably need to be reassessed.

If you understand my analysis, you will understand that I have been singing for some time. It all depends on the environmental analysis, because the economic development hesitates in the face of such a new high interest rate.

Crypto represents one of the most risky asset classes around, so once the blanket is dragged out, it will always fall into a desperate situation. This is what happened. Jerome Powell and the Federal Reserve quietly pulled out the blanket.

Under such a macro background, there is a suspended ceiling. Until inflation is defeated and interest rates reach the highest level, cryptocurrencies are not easy to increase. At this stage, the trading interest rate of national bonds is 4%, but it may rise to 5% at the beginning of 2023.

We are still worried that inflation, which has peaked, will continue for some time. The human resource market did not realize the real sense of anxiety, but the requirements have been curbed, but not very obvious.

A lot of bad news

I want to announce that cryptocurrency may be a bad thing to avoid despair. He hesitated at the $20000 level for a long time, and could not improve in the case of more comprehensive market anxiety.

However, I didn't expect that this matter would be so hot. The collapse of FTX is the dividing point of cryptocurrency. I firmly believe that this will lead to more damage than most predictive analysis.

You can see that the credit agency Moody's downgraded the bond rating of Coinbase, implying that the trading center is likely to adopt bad behavior after bankruptcy. I wrote an article describing the phenomenon that many Bitcoins are excluded from the trading center, indicating that trust has been broken and is at the lowest level in history.

In fact, less than a month after the collapse of FTX, a very surprising 200000 bitcoins will be discharged from the trading center. Even Katie Field warned that the organizational retention rate would decline.

They said, "When someone is worried, they should be greedy", but I don't know whether it is applicable. Cryptocurrency is at a crossroads. In the larger economic powers, Bitcoin has never experienced a bear market - remember, Bitcoin was released in 2009, so it has never experienced anything except the bull market of asset flammability.

Now things are different. Infectious diseases are sweeping again, the reputation of cryptocurrency is in tatters, and ATM will no longer support everything. The time is very difficult.

Previous data encryption winter

In this environment, these conditions are unprecedented for cryptocurrencies. This is why I think it is naive to extrapolate the previous cycle time to the current stage. When the interest rate is 0%, but other economic powers are developing rapidly, the rebound is much easier. It is worth mentioning that the scale of asset destruction this time is much larger due to the rapid increase of cryptocurrency during the COVID-19 pandemic.

Nevertheless, inflation will eventually be defeated. Interest rates will not be raised. This is also the global regularity of people's lives, so risk assets will rise again.

I firmly believe that this time, the duration of winter is actually a little longer than many people expected. When we look back at the previous cycle time, winter has also gone through a long period of time. The figure below depicts the price of Bitcoin in 2014, showing this.

After approaching the peak value of 20000 US dollars in December 2017, Bitcoin won't break through this barrier again until the fourth quarter of 2020 when the epidemic situation is repeated. It marks the nearly three-year fallow period, and investors have not been able to obtain all important profits in the data encryption world.

We have been in a bear market for a year, whether it is cryptocurrencies or assets. Predicting and analyzing the future development of cryptocurrency will make you look silly, but I will try anyway. If we were halfway through the bear market, I would be surprised.

With the winter cold wave coming in Europe, we all realized the high-tech enterprises in energy demand. The war in Ukraine is still going on, and inflation is again inextricably increasing. It is just a naive idea that cryptocurrency is likely to rise soon.

Naturally, this may change in an instant. The proactive information from Ukraine may make the sales market move northward in an instant, but this is unpredictable. However, I think the basic situation is that the pain period in the future will be longer than many people realize.