The crypto market rallied in recent weeks sending prices of popular digital currencies such as Bitcoin (BTC) and Ethereum (ETH) near their all-time high prices. While some investors might be starting to get worried about the crash that could follow, a new report suggests that the next crash will be milder than usual.
Bitcoin, which was trading below $42,000 by the end of September, manage to pull off a spectacular rally, which saw the crypto rising by almost 50 percent in just two short weeks. BTC traded above $62,000 on October 16 before slightly retreating to $60,537 at the time of writing based on Coindesk data.
Ethereum, which was trading just above $2,800 in September, posted a steep 40 percent increase in just two weeks. ETH traded above $3,900 on October 16 before retreating to $3,709 at the time of writing.
While an upward moving market is definitely good news for HODLers, there’s always that worry about the next crash. There’s actually a historical basis for this concern as the Bitcoin market has this “tendency tend to crash by over 80% after logging strong bull runs might come to an end,” according to Cointelegraph.
Fortunately, a new report by the California-based hedge fund Pantera Capital suggests that a crash might be milder compared to past price drops. Pantera noted that “recent periods of BTC price drops have been less severe than in the past.”
During the 2013–2015 and 2017–2018 bull runs, BTC crashed by around 83 percent. However, during the recent 2019–2020 and 2020–2021 rallies, the Bitcoin market dropped by around 61 percent and 54 percent respectively.
This could mean that future bear markets would be “shallower” in comparison. “I long advocated that as the market becomes broader, more valuable, and more institutional the amplitude of prices swings will moderate,” Pantera Capital Dan Morehead said.
This could also mean that future rallies could become milder in comparison. “The flip side is we probably won’t see any more of the 100x-in-a-year rallies either,” he added. “The cycles shown logarithmically make today’s level look cheap to me.”
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