The cryptocurrency market has experienced multiple bull markets so far, and each bull market has unique causes and market characteristics. In addition to the rotation of track funds in the market, macroeconomic factors, such as changes in global financial policies, central bank monetary policies, and expectations of economic growth or recession, will have a significant impact on the market. Even in a bull market, there may be unexpected events that cause prices to drop to the point where you wonder whether the market is about to turn bearish. Is there still conditions for this bull market to continue or even reach new highs?

In fact, the so-called bull market is not as "only rising but not falling" as some investors think. In the past few bull markets of cryptocurrencies, there have been many large pullbacks.

Several of the more famous declines occurred during the bull market cycle, and what investors want to know most is whether there is a rebound after the retracement? How long does it take to start the rebound, and how much does it rebound? The following is a simple analysis of the declines and rebounds in the past few rounds of bull markets.

2011 bull market: retracement of 93%, rebound took about two months

2013 bull market: 58% retracement, rebound took about a month

2017 bull market: 70% retracement, multiple declines and rebounds in between, the overall rebound took about two months

2021 bull market: 54% retracement, rebound takes about three months

2024 Bull Market: 20% retracement, rebound takes about 20 days

It is currently experiencing a new wave of decline, and the strength of future recovery remains to be verified by the market.

During each retracement and recovery, the market value of the cryptocurrency market will change significantly, and Bitcoin, as the currency with the highest overall market value, we can roughly observe from the Bitcoin market value the extent of the market value evaporation during each retracement, and The volume of funds entering and exiting the market,

It can be seen that the retracement of Bitcoin price or market value in this bull market is actually not as large as in the previous bull markets!

Why does the bull market fall: Possible factors causing the decline in the bull market

There are many reasons for market growth, but the factors that cause market declines are usually easy to categorize. We analyze several possible reasons for price declines in a bull market, so that you can check whether these waves of declines have occurred. When you encounter related events in the future, you can use them as a reference for hedging when trading or avoiding chasing highs and selling lows.

Macroeconomic factors

Interest rate changes: If major central banks around the world raise interest rates, funds may flow out of risky assets and shift to more stable investments, causing prices in the cryptocurrency market to fall.

Global economic uncertainty: Uncertainties such as geopolitical events or a global economic recession, such as war or a pessimistic economic data outlook, may lead to increased risk aversion among investors and affect market sentiment.

Regulatory risks

Government regulatory policies: The cryptocurrency market still faces regulatory risks from governments around the world, and any major regulatory policy changes may have a significant impact on market prices.

Exchange compliance risk: Compliance and operational issues at major exchanges, such as hacker attacks or misappropriation of funds, could also trigger market panic and lead to price declines.

Internal market factors

Market Sentiment Swings: The cryptocurrency market is known for its high volatility, whether due to FUD (Fear, Uncertainty, and Doubt) or other reasons, which can lead to wild price swings. Rapid shifts in investor sentiment often trigger wild price swings, especially during the retracements of bull markets.

Liquidity risk: The liquidity of the cryptocurrency market is relatively low. When market sentiment is unstable, the flow of large amounts of funds may cause large price fluctuations. Insufficient liquidity may cause prices to fluctuate dramatically in a short period of time, and even further lead to continuous liquidation of assets, thereby amplifying market volatility.

In contrast to recent events, it can be said that the Mentougou compensation incident, the risk of war with Iran, the expected implementation of interest rate cuts, and suspicions of a global economic recession have formed a chain reaction that has hit the recent market hard. Not only cryptocurrencies, but also major stock markets in various countries are facing painful declines.

Are the conditions for a bull market still met?

Seeing this, what everyone wants to know most is probably whether the bull market is over?

In fact, the causes of each bull market are different. They are affected by macroeconomic factors as well as the development of the cryptocurrency market itself. Let’s evaluate several key factors that catalyze the bull market and see if the bull market is still there!

Macroeconomic factors

Global financial policies: In most bull markets, macroeconomics plays a pivotal role. Monetary policies of central banks around the world, such as quantitative easing (QE) and interest rate cuts, have a significant impact on market sentiment. Especially during the pandemic, central banks around the world have been printing money on a large scale and implementing low interest rate policies, which have greatly stimulated market liquidity, reduced borrowing costs, and prompted investors to start looking for assets with higher returns.

In this environment, the high potential returns of Bitcoin and other cryptocurrencies make them more attractive investment targets in the market.

Inflation expectations: Inflation will cause investors to worry more about the depreciation of traditional currencies, and they will turn to look for assets that are better able to hedge inflation risks. Bitcoin is regarded as "digital gold" because of its similar scarcity and has become one of the tools that some investors believe is suitable for combating inflation.

Cryptocurrency Market Factors

Technological breakthroughs: Before each bull market, there are usually technological breakthroughs or the emergence of new technologies, such as Bitcoin's Lightning Network and Ethereum's smart contracts. These technologies have been absorbed by various ecological projects and become more profitable ways of playing, such as DeFi, GameFi and even NFT, which have greatly attracted investors' interest and capital into the market.

Increase in overall participants: Each bull market is usually accompanied by an increase in the number of market participants, whether individual investors or institutional investors. Overall, more funds entering the market can drive prices to continue to rise.

Faced with the increase in liquidity after the interest rate cut, the political favorability of several major economies in the world towards cryptocurrencies, the continued growth in the number of investors through channels such as ETFs, and the continued evolution of application technologies of cryptocurrencies such as RWA, do you believe that the bull market is still there?

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