5 Reasons Why Bitcoin Is Not Dead Despite Its Recent Bearish Streak to $20K

5 reasons why Bitcoin is not dead despite its bearish streak

When the crypto market is down, it is a common scenario for mainstream media outlets to declare Bitcoin dead.

However, those used to the market’s high volatility tend to take such statements with a grain of salt. While it may seem scary to see that Bitcoin (BTC) is down 70% since its November’s all-time high of $67,570, we should consider how many times BTC has recovered from huge market crashes throughout its over 13 years of history.

For these reasons, we have collected five reasons why we believe Bitcoin is not dead, despite its price recently falling below $20,000.

Let’s see them!

1. BTC Hashrate Hits All-Time High

One of BTC’s most important fundamental indicators is the cryptocurrency’s hash power.

As a blockchain network that utilizes the Proof-of-Work (PoW) consensus mechanism, Bitcoin’s hashrate measures the total computational power miners use to validate blocks and secure the network. For that reason, the more hash power Bitcoin has, the more resilient its ecosystem becomes.

According to Blockchain.com’s data, this year’s bear market had no to minimal impact on Bitcoin’s hash power. In fact, the BTC hashrate hit an all-time high at 231 million TH/s on June 12.

Interestingly, this means that miners continue securing the Bitcoin network even though electricity prices are rising rapidly worldwide and BTC mining profitability has been falling to 2020 lows due to the recent crash.

2. Record Lightning Network Activity

Many investors consider Bitcoin an excellent store of value that can retain its purchasing power in the long run. At the same time, users can leverage the high-throughput Lightning Network on Bitcoin’s second layer (L2) to send and receive instantaneous and low-cost transactions.

And the Lightning Network has been thriving lately. According to Arcane Research’s study, the USD-based payment volume of the L2 solution increased by over 400% from Q1 2021 to Q1 2022. During the same period, while the public BTC capacity surged 218%, public channels and nodes have grown by 127% each.

Confirming the report’s findings, recent stats show that the LN reached an all-time high in network capacity at 4,225 BTC on July 12, with only a minor decrease in the number of nodes and channels since Q1 2022.

3. Bitcoin Has Recovered From Worse Crashes

If we jump back in time to see how Bitcoin handled market crashes, we can safely conclude that it has always recovered from all of these unfavorable situations.

In fact, this isn’t the hardest hit Bitcoin has taken throughout its history. For example, between December 2017 and December 2018, the cryptocurrency’s price decreased 84% a year after reaching a new high near $20,000.

Other examples include:

  • A 71% fall between 2019’s highs and 2020’s lows
  • A nearly 84% drop between late 2013’s highs and lows reached in early 2015

In all the above cases, Bitcoin has successfully recovered from major crashes. What’s more, the cryptocurrency reached new highs during each new market cycle.

4. The Crypto Market Cycle

Just like in the case of stocks, bonds, and other major financial assets, the crypto market is cyclical in nature.

Fortunately, due to Bitcoin’s halving mechanism and the fact that the cryptocurrency prices tend to follow BTC, we have access to important information about digital asset market cycles.

Roughly every four years, a halving event occurs, decreasing the amount of BTC that can be mined with each new block to half. As this deflationary mechanism reduces the new flow of Bitcoin supply by 50%, each halvening is considered a significant event for crypto users.

Due to such a sudden and significant decrease in the new supply of coins, bull runs have always followed halving events, usually lasting for a little less than two years each. After that, bearish bias will dominate digital asset prices until a few months before the next halving.

Between the last two halvings – July 2016 and May 2020 –, Bitcoin’s bull market lasted for approximately 17 months until December 2017’s high, followed by a year-long bear market (the end of the cycle consisted of a mix of bullish and bearish trends).

Regarding the current cycle, only nine months have passed after BTC reached its all-time high at $67,570 on November 8, 2021.

For that reason, it’s safe to call the current downward movements normal, as they are part of an ongoing bear market that occurs with each crypto market cycle.

5. Fears of a Looming Recession

Crypto is not the only asset class that has taken a significant hit lately.

Of course, due to their limited maturity and the fact that we are in the bearish part of the current market cycle, losses are generally greater for cryptocurrencies. However, major stock indices and even some commodities like gold have fallen by double digits since the start of the year.

As inflation is hitting record levels among major economies, alongside soaring energy prices, the ongoing conflict between Russia and Ukraine, and supply chain issues, fears of an upcoming recession have triggered huge sell-offs across financial markets.

Bitcoin Is Definitely Not Dead

It is common to bury Bitcoin after a larger fall.

However, by analyzing the cryptocurrency’s fundamentals, its historical price movements, and current market conditions impacting investor sentiment globally, we can safely conclude that BTC is not dead.

On the contrary, despite the 70% drop in its price, its network is more secure than ever, with payment activity on the Lightning Network growing rapidly.

At the same time, while most markets are in turmoil and investors expect a recession to occur soon, Bitcoin’s bearish movements are completely normal, as they are part of the current market cycle. And, as it did every time throughout its history, BTC is expected to recover from this bearish streak.

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