Analysis: Bitcoin Will Not Repeat the Extreme Bear Markets of 2018 or 2022

Odaily According to Vetle Lunde, Head of Research at K33, Bitcoin has fallen approximately 40% from its October high, with a single-week drop of 11% last week, significantly impacted by declining global risk appetite. Despite recent price movements showing "unsettling similarities" to the deep sell-offs in 2018 and 2022, Lunde emphasized that "this time is different" and does not expect an 80% peak-to-trough drawdown similar to the previous two cycles.

Lunde pointed out that the current market environment differs from past cycles due to reasons including increased institutional adoption, inflows into regulated products, and a looser interest rate environment. Meanwhile, several indicators commonly used to gauge market bottoms have begun flashing signals:

1. On February 2nd, Bitcoin experienced a high-volume percentile trading day reaching 90, with single-day trading volume exceeding $8 billion, and the price retested the 2025 low.

2. In the derivatives market, both open interest and funding rates have fallen into extreme negative territory, accompanied by approximately $1.8 billion in long liquidations. Historically, such conditions have often coincided with rebounds.

Vetle Lunde emphasized that while bottom signals have appeared, they are not yet conclusive. Similar extreme volume and derivatives indicators have occurred during fake rallies or mid-cycle corrections. The key short-term support level is around $74,000; a break below could accelerate the decline, with targets pointing towards around $69,000 (near the November 2021 high) or the 200-week moving average around $58,000. Overall, Vetle Lunde believes long-term holders currently face no urgent selling pressure. The current price presents an opportunity to attract long-term investors to enter the market and does not signal a repeat of the extreme bear markets of 2018 or 2022. (The Block)