Crypto winter has 250 days left if the market cycle repeats itself: Grayscale

Grayscale Investments latest Insight The report provides interesting food for thought, and marks the start of the current bear market in June 2022, which could last for another 250 days if previous market cycles are to be repeated.

Grayscale notes that cryptocurrency markets mimic their conventional counterparts with cyclical movements. Bitcoin (BTC) market cycles typically last 4 years or about 1,275 days. The company defines a cycle when the realized price of BTC moves below the current market price.

Realized price is determined by the sum of all assets at their purchase price divided by the market value of the asset. This provides a measure of how many positions are profitable, if at all. June 13 saw the realized price of BTC cross below the market price, which Grayscale identifies as the start of the current bear market.

The company believes this provides a first-class investment opportunity – which is set to last another 250 days from July if the duration of previous cycles is repeated.

Grayscale reflects history and highlights the 2012-2015 market cycle with events such as the rise and fall of the dark Silk Road online marketplace and the infamous Mount Gox debacle, which led to the first major bear market. The development of Ethereum, major stock exchanges and wallet providers led to a gradual rise to the next highlights in the market.

2016 to 2019 will be remembered for the boom in initial coin offerings, made possible by smart contract functionality introduced by Ethereum. Much of the capital that flowed into the cryptocurrency ecosystem at the end of 2017 disappeared the following year, when the second major bear market began.

The market cycle in 2020 will be remembered as a story of influence. Grayscale notes that investors were enticed to take advantage of increased public spending trading during the Covid-19 pandemic.

Related: Terra infection leads to 80% + decrease in DeFi protocols related to UST

A positive financing rate lasted for six months, with many traders taking advantage of positions with cryptocurrency as collateral. As cryptocurrencies fell, traders were forced to sell, triggering a cascade of liquidations as BTC fell from a peak in November 2021 of $ 64,800 to $ 29,000 in June 2021.

Again, influence damaged the markets a year later, but Defi’s large centralized finance (CeFi) players faltered after attracting massive investments with attractive returns. The rest is history, as the collapse of the US Terra stablecoin (UST) engulfed the ecosystem. Over-leveraged traders and positions were liquidated across various CeFi platforms – which worsened market sales and lowered large capital lending companies in the area such as Celsius and Three Arrows Capital.