Are we about to have our final capitulation moment to mark the bottom? Yes, *IF* crypto history repeats itself

After 10 months since our all time high, we are without a doubt deep in bear territory. At the time of writing, Bitcoin is a little over 70% down at $19.5k and this week has been unsettling to say the least. It is difficult for Bitcoin to catch a bid. With the exception of some shitcoins, everything is (slowly) crumbling: Stocks, crypto, commodities, and gold. This is perhaps not surprising, as inflation is very high and so far not coming down despite interest rate hikes, energy prices are still very high, and there is a lot of fear and uncertainty in the market. The best performing major asset is the US Dollar (USD), and even USD is losing value quick due to inflation.

Is it about to get worse?

I fear that it is about to get worse before it finally starts getting better and I found some data *suggesting* that might be the case. As can be seen in the chart below, after about 310 days since the major peak, we are at the exact same percentage drawdown from all time high that we were in the 2017-2018 bear market and 2013-2015 bear market. A rather peculiar coincidence. Both times, the final capitulation moment was close. Although the difference between ~70% and ~84% might not seem large, from all time high this means we could drop about another 50% to around $10k.

The Bitcoin returns since the major peaks in %

But Beyonderr, crypto has not seen a recession and such economic turmoil, so what is the point of looking at past bear markets? Firstly let me say that it is a miracle that we are still at 20k from that perspective. Moreover, I dont think it is an entirely wasted comparison, given that the worse economic environment is partly offset by the high levels of institutional adoption we see every day. That said, obviously, we have no clue what a recession would do to crypto despite all the adoption. This market is too young.

Confluence in Stocks

There is confluence for the "one more drop" thesis if one has a look at stocks though - and this data is in a sense more relevant because stocks have been around much longer. Interestingly, we seem to be following the 2008 S&P 500 (SPX) bear market fracal to near perfection, as can be seen in the two charts below here. The similarity in the fractals is eery. Back in 2008, we also were also close to having our capitulation drop.

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The S&P 500 (SPX) bear market fractal from 2008 (black) and current chart (orange) overlaid on top of each other

S&P 500 (SPX) bear market fractal from 2008 (yellow) next to current chart presenting the same information as the chart above

Lastly, the chart below shows a red line each time the Nasdaq dropped 4% or more. Such days tend to happen during capitulation moments. It is possible that similar to 2008 and 1987, we see several of these massive selloff days in a row. During bear times, 4% drops never happen in isolation, and we already had two days of 4% drawdown or more. This usually marks the bottom though as these days are rare.

The Nasdaq with red lines showing the days with a 4% or more drawdown.

Conclusion

If there is a final capitulation to mark the bottom, this will likely present an incredibly buying opportunity. Will this happen? Obviously we dont know because there are no guarantees, only estimates. But it isnt looking too pretty.

All I wanted to do was share some data, so you can make your own perhaps just a little bit better informed decision on how to move forward from here. Even if it gives some people a 1% better odds or a bit more money it would be worth it. Please dont base any decisions off of this post alone, there are plenty of arguments for why the bottom would be in (e.g. many bottom indicators of crypto are flashing). All I wanted to do was inform people who might find this relevant.

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UPDATE 17 September: More confluence, as 216K Bitcoin has been sent to exchanges:

https://preview.redd.it/wm0sv83qpeo91.png?1280&format=png&auto=webp&s=86bd6001431770e5a227305c5ab027b27e3828e7