As the cryptocurrency market seems to be finding some form of stability, investors are hopeful that the market’s short to medium-term outlook will remain positive. Following a few months of bearish values, is crypto heading back into more bullish movements?

The push and pull of the bear market

In every investment field, bear markets and bull markets are a mainstay in the industry. 

Bear runs are when values drop 20% or more from recent highs, and bull markets see 20% or more gains over a short burst of time.

While a bear market negatively impacts the short-term value, there are positive takeaways for the long-term health of the industry:

According to Bitsoft 360 AI site CEO:

“The bear run is the time when the market sheds the risk-averse investors. It’s not necessarily a bad thing for the market overall because those who still hold and trade are likely the people who will carry the industry until the next cycle – and those will be the ones to benefit when the market turns profitable.”

While using historical data and market charts can help estimate market movements, it is impossible to tell – in any investment industry – when a bear market might step in and when the bulls will take over. However, using previous data can help define trends which can give a rough indication of where the market might go.

Bitcoin and crypto prices recently 

Over the past few months, the cryptocurrency market has not seen any major movements in either direction. Trading somewhat sideways, the majority of the market indicators (such as value, trading volume, and sentiment) are pointing to a possible end to the bear run. 

More and more, we’re seeing the cryptocurrency market drawing cues from the stock markets this year. As a result, it might not come as a surprise that the turn of bearish events towards the end of 2021 saw a decline in the stock markets too. Despite the stock market’s recent ups and downs, it is still significantly higher than its March lows. A recession might be avoided if it can hold stability or grow even more.

If the stock market sees a meltdown, it might trigger a recession. This might break the correlation with digital assets as investors look to diversify with portfolios with alternative assets. Cryptocurrency has become touted as one of the safest hedge assets against inflation. 

If this correlation does hold until the end of this year, the recent gains that have been seen in the stock market will play a positive role in the cryptocurrency sector. 

If a consistent incline in the stock market sets the stage for a broad market recovery, it might pave the way for a healthy cryptocurrency market recovery. If the cryptocurrency market increases too rapidly, it runs the risk of a major sell-off. Smaller short-term increases spell a more positive outlook on the longer-term market.

Bitcoin as a hedge against inflation

With Bitcoin and other crypto assets seen as possible hedge assets, investors consider the crypto market as a potential safe haven investment. This means Bitcoin will keep increasing in value as investors seek out alternate forms of investing if national economics and the stock market fail.

Because of its capped supply – only 21 million coins will ever be able to be mined – Bitcoin does not run the risk of overprinting in the same way that fiat does. This means it has much more potential to be a store of value that will stand against rising prices and diminishing currency value.

This makes the cryptocurrency market appealing when fiat currency trading is suffering.

Has Bitcoin bottomed in 2022?

While Bitcoin might be seen as a longer-term investment to some traders, short-term investors are hoping that the cryptocurrency has seen the end to the aggressive bearish declines. 

Fundamentals indicate a better future, especially when combined with technical signs that clearly claim cryptocurrency has already reached its bottom. However, there is still fear in the market. Crypto investors have suffered as a result of the bear market, with many suffering financial losses. People may become more cautious in the future and less likely to make sizable investments in digital assets as a result of this. 

Therefore, it is advised that investors invest with clever, clear strategies. Diversifying across the market is a great way to avoid losing if one crypto sees a dip. Avoid putting all of your eggs in one basket and look at a variety of assets. 

By: Hannah Parker