The bear or bear market bear market) is a sea of melancholy. Those who are just taking their first steps in Bitcoin see red flags everywhere. However, these markets leave a cleaner ecosystem free of scams and projects that do not add value.
Bitcoin has been through at least three major bear markets. I have been able to experience two of them first-hand (the one from 2018 and the current one, in 2022). In each of these periods, certain types of patterns or cycles are observed that end up leaving a stronger and cleaner Bitcoin ecosystem..
It is worth keeping in mind that Bitcoin is the cryptocurrency that has offered the greatest stability in the marketand I am not referring to its price, but to what its technology and protocol means.
The downward cycles in the price of bitcoin seem to have certain patterns. On the cusp of the all-time high (or ATH) all time high), multiple projects arrive in the cryptocurrency ecosystem that promise to change the world. At their lowest point, these practically disappear.
Before starting this bear market, decentralized finance (DeFi), non-fungible tokens (NFT), P2E gaming (play to earn or play to win), metaverses and stablecoins, created an unsustainable oversubscribed market.
The breaking point of this “bubble” was the fall of Terra USD (UST), a stablecoin that eventually lost its peg and was unable to recover.
Looking back, this cycle of ambitious projects that promised to change the world, is closely related to initial coin offerings or ICOs that were a trend in 2017. This is what cryptoactive presales are called, before their listing on exchanges.
On some occasion, I read that one of the projects promised to “be better than Bitcoin”. However, few of them came to have a massive use and they only remained as one more cryptocurrency. Or even served as a scam tool, as was the case with Bitconnect.
Bitcoin comes out of bear markets well
In 2018, the second great bitcoin “debacle” occurs (the first was in 2013): the market is collapsing. The price of bitcoin goes from almost USD 20,000 to close to USD 3,000, a drop of 85%. Such a situation gave bitcoin’s detractors a lot to talk about, they considered that cryptocurrency was dead.
The price recovery time was slow. However, the technology continued to grow in the meantime. For example, for the year 2018, the first light wallets of the Lightning network are born. They were wallets that you could install on your cell phone and use the Lightning network in them for immediate payments with bitcoin, as was Eclair.
At the time, it was a super complicated technology, due to the number of steps that had to be taken to use the Lightning network, but it was an important event, which curiously took place within a bear market. Currently, there are many Bitcoin Lightning Network wallets, very friendly with the user, with minimal configurations of use, but that maintain the same security.
A cycle that seems to repeat itself
In the last bull market for bitcoin and cryptocurrencies there were several booms that occurred in the ecosystem. The industry of NFTs and P2E games were the ones that sold the most “smoke” and hopes to the community.
As happened with the aforementioned ICOs of 2017, there are few P2E games that still manage to retain a significant mass of active users per day. Axie Infinity is the greatest example of themof which, its developers are still improving their game.
Now, in a bear market, interest in many of the new “technologies” has been dying out. It seems that it is a fad process where there is no real innovation, but only a way to sell the formula to get rich easily with cryptocurrencies. This ends up decaying, leaving only what is really useful.
In Bitcoin, for example, developers are currently focusing on bringing the issue of commissions to the discussion table, as is the case with BIP-119, as well as the development of new implementations thanks to the arrival of Taproot, which adds privacy enhancements.
The market and the ecosystem are in a detoxification phase. The bear market has little time, and there are still empty projects, which offer nothing of interest, hanging around within the ecosystem, and which continues to attract new users. For now, just wait.
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