By looking at Bitcoin's price action, you can see that Bitcoin's long-term bull trend has been hyped. A situation where investors had allocated funds in anticipation of more investors into cryptocurrencies. And a favorable environment as a result of easy monetary policy, stock market, and lack of regulation). Unfortunately, after more than a decade of favorable conditions, Bitcoin faces the opposite of each of these dynamics.

Bitcoin's recent 75% downtrend from November 2021 to June 2022 might be the first phase of a larger bear market. It seems like Bitcoin is currently entering its first true bear market ever. However, Bitcoin has yet to enter its true bear market territory. Bitcoin's first bear market begins below $20,000, and it is currently below $20k. Unfortunately, all the most famous bull trend indicators are becoming invalidated.

The pain has been felt since Bitcoin's price peaked in November. Comparing Bitcoin's pullback to the 2017 market top suggests further declines are likely in the near term. In previous bear markets, the price of BTC fell roughly 85% from its high to its eventual low. History will repeat itself in the current environment. This would translate into a low of above $10,000 and another 50% retracement from current levels.

Cryptocurrencies are taking a lot of fall this period. The outlook for Ether is even more pessimistic, as previous bear markets saw its price drop by 95%. If the same happens this time, Ether's price could drop to $300. And Bitcoin, who is the lord of the crypto rings, is not left out

A lot of indications point to bitcoin taking a pitfall. A plunge below $10k is not only a loss but another heavy crash before the year ends. Some of the signs that show that Bitcoin would crash are;

Cryptocurrency Regulation

There have been attempts by various governments to regulate crypto. But, the majority of buyers were into crypto as a result of the decentralization of the currency. The U.S. and the E.U are the two major governments trying to interfere with the working of the crypto. Recently, the U.S government sanctioned Tornado Cash, a currency that operates on Ether's blockchain. This virtual currency mixer operates in complete anonymity, to the extent that no one can know the origin of a transaction. However, it was alleged to have aided cyber criminality, so it was sanctioned.

The consequences of this sanction might be heavier on Ethereum, but it impacts bitcoin. First, the Tornado Cash sanctions prove that Ethereum is censorship-resistant. And so prove that no crypto is completely out of the government's control. Millions of ETH investors thought Ethereum apps were immune to government censorship. As such, there is a possibility of increased regulation. Consequently, it will lead to a lower push in the price of the crypto economy, especially Bitcoin prices.

The stock market crashes

For months, traders have witnessed a correlation between crypto and the stock market. Most especially Bitcoin and the S&P 500, which had a record of a high hit together in March 2022. With this resemblance, we know what follows after a rise in crypto. Or the implication of a stock market crash on crypto. Meanwhile, the current prediction of the stock market is that it will likely collapse. If 2008 or 1999, stock market history were to repeat itself. There are plenty of indications that the stock market will crash, and Bitcoin will tumble after when it does.

Tether Collapse

The Tether stablecoin, which is meant to be stable, has recently become very unstable. This is one of the dynamics that has plagued the crypto market for years. In 2018, two university professors released a 60-page report. This report detailed how Tether used market manipulation tactics to push bitcoin's price higher during the 2017 rally. While the crypto market has ignored the controversy for years, the U.S. Department of Justice recently began reopening its investigation into Tether. As the crypto market's largest stablecoin (worth $43 billion), it is reasonable to assume that a Tether banking fraud conviction would negatively impact cryptocurrency prices. Bitcoin will take the most hit.

Exchange bankruptcy

The "phase one" of the Bitcoin bear market (from $68,000 to $17,000) saw numerous cryptocurrency lenders declare bankruptcy. During Phase 2 of the downtrend (which will take Bitcoin below $20k), it is assumed that more exchanges and lenders will declare bankruptcy/bankruptcy. Notably, Crypto.com (CRO-USD) recently made a move similar to the pre-bankruptcy actions of Celsius and Voyager, reducing the rewards paid to its credit card holders. While this doesn't prove anything, it doesn't bode well. It will end up in more investors losing faith in crypto and Bitcoin.

Short trade

Currently, there is a short trade of Bitcoin at $20,200 and short Ethereum at $1902. And with the upcoming cryptocurrency regulations, no one should expect bitcoin to spring up magically. Moreso, macroeconomics and central bank policy trends support the bearish outlook for Bitcoin. This makes it riskier than ever and the short trade more constant. However, investors should continue to expect monthly inflation data and economic data to influence prices heavily. But markets could bounce back if Republicans win a majority in the House. And, if the Democrats win, we would expect a massive sell-off.

Beyond all the above reasons, Monkeypox is here, and it is a virus that represents a major "black swan" event that the market has not priced in. At the moment, there have been 63,117 confirmed monkeypox cases globally. While Monkeypox is unlikely to spread as quickly as Covid-19, it is worth noting that during February 2020, cumulative international Monkeypox cases are currently the same as Covid-19.

We expect Monkeypox to develop into a bigger problem as cases increase in 2023. A rise in monkeypox cases could spook many citizens. A lot of people will need to convert to cash, thereby encouraging short trade all the more.

Conclusion

After 13 years of good financials and two massive hype cycles, Bitcoin is bracing for its biggest crash (its first true bear market). We expect this downturn could push Bitcoin to $13,000 to $11,000 or $8,000, etc. As much as we do not hope for this wrecking and tragic crash, all crypto traders need to be aware of this, and when you are trading, do so with a lot of caution.