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Do not index
In today’s edition of the Rekt Capital Newsletter, I will focus on addressing three main questions regarding Ethereum’s historical Market Cycles:
- How much does Ethereum retrace in Bear Markets?
- How long do Ethereum Bear Markets tend to last?
- When could the next Ethereum Bull Market peak take place?
Let’s dive in.
How Much Does ETH Retrace In Bear Markets?
This is ETH’s third Bear Market.
The first one was -72% deep.
The second was -94% deep.
And this current one is approximately -82% deep.
What if ETH were to retrace -94% once again?
It would reached the $230-$300 area (orange) which would technically be the validation point of the macro Double Bottom formation ETH had broken out from in 2020.
After all, this area has never been retested as support before.
However, it is difficult to imagine that ETH could retrace that much once again.
Perhaps it is better to simply average out the previous Bear Markets of -72% and -94% and notice that -83% is an average Bear Market for Ethereum.
Interestingly, the average Bear Market for Bitcoin is -84.5%.
Some Bear Markets are shallower, some may be deeper but perhaps an average figure can give us insight into understanding whether Ethereum is getting close to a generational bottom.
At this point in the ETH Market Cycle, ETH is down -81% and so ETH is slowly reaching the average Bear Market correction.
How Much Time Does An ETH Bear Market Last?
Based on historical Bear Market periods, history would suggest there is still plenty of time left in this macro downtrend.
In the first Bear Market, ETH took 183 days to end its -72% retrace.
In the second Bear Market, ETH took -334 days to end its -94% retrace.
In this current third Bear Market, ETH has experienced this downtrend for 212 days and is -81% down.
History suggest ETH could still experience 3 more months of macro downtrend, whether that’s via extra downside, relief before further downside, or simple consolidation.
In other words, if Ethereum is to repeat a 334 day Bear Market then the Bear Market could end in October 2022 (i.e. by Q4).
When Could The Next ETH Cycle Peak Occur?
Let’s take a look at ETH’s price action through the lens of Bitcoin Halvings which are marked in horizontal blue lines.
The first Ethereum Bull Market peak occurred 549 days after the second Bitcoin Halving.
The second Ethereum Bull Market peak occurred 549 days after the third Bitcoin Halving.
Ethereum tends to peak 549 days after the Bitcoin Halving.
A very simplistic extrapolation of this historical tendency would mean that the next Ethereum Bull Market peak could occur ~549 days after the fourth Bitcoin Halving in October 2025.
Thank you for reading.