Crypto

Blockworks Founder Claims Cryptocurrencies Headed For “Lifeless” Stage 3 Bear Market

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Blockworks co-founder Jason Yanowitz identified the three stages of a bear market and said that we are currently in stage two, experiencing drastic price declines. The market will only stall and get depressed before bouncing back up again, and those who don’t give up will be rewarded.

He advised the community to remember why they started and to be resilient in times like this.

bear market stages

Yanowitz’s description of the three stages of the bear market is based primarily on a blog post written in 2018 by Union Square Ventures co-founder Fred Wilson.

Stage 1: The Rest

Yanowitz described the first stage as relaxation, where the market does not feel bearish. Investors are feeling excited and hopeful.

High levels of greed still hold from previous bullish sentiment, assets remain above their support and companies are doing well. The first stage is the one in which everything seems normal.

Stage 2: forced capitulation

Stage 2 is where bearish signs start to show brutally. The emotion of the first stage turns into anger.

At this stage, prices drop sharply and crypto critics begin the age-old “I told you so” chant. The general sentiment turns very negative, very quickly. Investors will choose to sell on the smaller price spikes.

Companies have to take steps to survive, such as choosing to downsize. Those who rely on tokens for funding will have an especially hard time.

yanowitz said:

“In Stage 2, diamond hands become forced sellers. They don’t sell because they want to, but because they have to. Celsius does not want to sell, they may have to sell. There will be more funds, companies and individuals like Celsius.”

He argued that the market entered stage two after the crash of LUNA.

Stage 3: Bottomless Exhaustion

Stage 3 is when the market becomes lifeless. Anger turns to silence, where there are no temporary price spikes, no comments, no new projects popping up.

Remember why you started

Yanowitz warned of the dismal stage three gridlock and advised staying resilient. He reminded the current community that they are early adopters, and that it will be decades before the new world settles down properly. Until then, the community must endure those crypto winters.

He said:

“If you are a company, do whatever it takes to get ahead. If you are a builder, stay interested. Find other builders. Build with them. If you are an investor, develop your own theses. Place bets on the people you believe in.”

He ended his thread with a list of recommended reading material that all crypto enthusiasts should revisit at every opportunity.

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