Last Updated: 15 June 2022
The co-founder of crypto-media company Blockworks has given his take on the current bear market in a lengthy Twitter thread. It’s going to be long and it’s going to get a lot worse. Arthur Hayes sees $20,000 as a crucial support level.
Phase 1 and 2
In a long twitter thread, the Blockworks co-founder divided the bear market into three phases. In his opinion, we have passed the first phase, where it does not yet feel like a bear market.
“The enthusiasm (and greed) of the bull market still exist,” he tweeted about phase 1. “It feels like prices have dropped to ‘realistic values’.”
In this phase, there is still plenty of investment in and construction of new projects. And because there is plenty of money, difficult decisions, such as layoffs and stopping product development, don’t have to be made yet.
1/ There are 3 stages of a bear market.
We just entered stage 2 🧵
— Yano 🟪 (@JasonYanowitz) June 13, 2022
We are now in phase 2. The narratives or storylines devised to rationalise the downward trending market are running out. Layoffs are occurring, cynical reports are appearing in the mainstream media and there is talk of forced sales of crypto-currencies. The implosion of Luna ushered in this phase.
“In phase 2, diamond hands become forced sellers. They don’t sell because they want to, but because they have to. Celsius doesn’t want to sell – but maybe they have to. More funds, companies and individuals like Celsius will follow,” the Blockworks boss writes.
“The more noise the bears make, the lower the prices,” tweeted Yanowitz, who sees bitcoin and other crypto-currencies falling into a vicious circle as a result. “Enthusiasm turns into anger.”
In phase three, it seems like everyone has given up on the crypto market. It is quiet, there is little investment. But beneath the surface, construction is still going on. Prices bottom out, but then barely move from their seats.
“After maximum pain comes maximum exhaustion. There are no bounces. There are no narratives. Prices consolidate and go sideways or fall slowly. It is boring.”
On bottoms, anger turns to silence, Yanowitz argues. That may sound poetic, but it may not be a pleasant prospect for everyone.
“Close your computer, zoom out, go for a walk. But don’t give up,” advises Jason Yanowitz.