How Crypto OGs View the Bear Market: We Have Just Entered the Second Phase of the Bear Market
In a bear market, the pattern needs to be opened up; don't forget why you joined.Original Author: Jason Yanowitz (Co-founder of BlockWorks Group)
Original Compilation: czgsws & wzp, BlockBeats
This article is based on the views expressed by Jason Yanowitz, co-founder of BlockWorks Group, on his personal social media platform. BlockBeats has organized and translated it as follows:
The bear market has 3 phases. We have just entered the 2nd phase.
Phase 1: Relaxation
The excitement and greed from the bull market still linger. Mini-narratives that last for weeks will emerge. Assets still have a floor price support. Valuations are being adjusted, but companies are not making tough decisions (such as product eliminations or layoffs). Things seem fine.
The "feeling" of Phase 1 does not resemble a bear market. People feel that prices have returned to "realistic" valuations. Investors continue to allocate funds to their portfolios, and projects continue to build… Overall, life is good. Only a few are selling.
Phase 2: Forced Surrender
This is the phase where the market turns bad.
Narratives die out. Prices drop by 90%… and then drop another 90%. Widespread layoffs occur. Mainstream media and cynics go all out in Phase 2. They will tell you, "I told you so!"
Luna sent us into Phase 2.
In Phase 2, diamond hands have to start selling. They sell not out of choice, but because they have to. Celsius doesn’t want to sell, but they might have to. More funds, companies, and individuals like Celsius will emerge.
In Phase 2, market rebounds will immediately trigger sell-offs. This is the "dead cat bounce." Companies that need token prices to stay high will be crushed. Founders buying their own tokens to sustain projects will also be crushed.
The lower the price, the stronger the shorts become. The stronger the shorts, the lower the price. This creates a vicious cycle. In Phase 2, prices often experience severe crashes. Excitement is replaced by anger.
Phase 3: Bottomless & Exhausted
After extreme pain comes extreme exhaustion. No rebounds. No narratives. Prices stagnate or slowly decline, which is boring. At the bottom, anger is replaced by silence.
In Phase 3, you will want to exit. Regulators will take action when market sentiment is low, and the KOLs and influencers that investors like will go quiet.
Web2 investors will quietly stop investing. Talented builders will leave. Companies will shut down. You will question every assumption you have.
Phase 3 is the hardest to survive. If you are a company, do everything you can to get through it. If you are a builder, stay interested, seek out other builders, and build together.
If you are an investor, develop your own investment logic and listen to the opinions of those you trust the most.
Do not lose sight of the bigger picture. We are building an open and free world. This will take decades, not years. Close your computer, reduce your focus, and go for a walk. Do not give up.
Many talented people have left. But those who stay will be rewarded. We will have to work hard, create value, and survive for quite a while to get through the bear market. Things will get worse before they get better.
In a bear market, broaden your perspective, and don’t forget why you joined.
