What Does a Crypto Market Bottom Look Like?

Given nasty, horrible market conditions, today’s newsletter will discuss the exact opposite of euphoria: the crypto bottom.

While crypto markets today are depressed for a lot of reasons, we’re not going to be discussing exactly why crypto is down, instead focusing on what a future bottoming out of markets might look or feel like. We’ll also take a look at how markets behave in terms of price action and market structure once they hit the bottom.

For the record–today, it doesn’t necessarily ‘feel’ or look like the bottom is coming anytime soon, and with macro conditions it might be a while until we get any kind of relief. Simultaneously, it’s inarguably better to build an $ETH or $BTC position now than when they were trading at all-time-highs. Yes, it’s rough out here, but no, it’s not the end of the world, and investors with longer time horizons will be rewarded.

And crypto is still here, still working in a decentralized and permissionless way. There will be tremendous opportunities in coming months and years with adoption, crypto infrastructure (check out our deep-dive report on oracles here), blue-chip protocols, and more.

With that said, we’ve identified five features of market bottom that should help ease your doubts and help to demystify crypto market cycles.

In November of 2021, everyone was ecstatic. There were hundreds of crypto influencers calling for a Q4 that would see Bitcoin rip to $100k and Ethereum to $10k. For some reason, we all drank the Kool Aid, and it seems all too obvious now that 20% risk-free APRs, million dollar JPEGs, and 10x pumps were too good to be tru.

And then the music stopped, slowly first, then all at once, then, when it felt like it was really bad, it got worse, then even worse, and, who knows, it might even get worse from here.

But things can’t go up forever, and they can’t go down forever either. While analysts, influencers, and pundits continued to adjust price targets upwards in 2021, now they continually lower their price targets. It’s that same irrationality over again, just played out reverse. And, at some point, that sentiment will flip.

Humans tend to overemphasize the present and overestimate the paradigm’s staying power. There is a bottom, we don’t know where it is, but those calling for a 10-year bear market are likely wrong as well.

Just as $250k bitcoin was highly unlikely, a $280 Ethereum is highly unlikely as well–don’t let the crowd get in your head.

In crypto markets, we like to talk about top and bottom signals as ways to figure out if the market is overheated or oversold. The top? $1 million Bored Apes, 4% of Americans quitting their job to trade crypto, widespread euphoria.

And what are the bottom signals? I asked a bunch of crypto old-timers I know who gave me the following answers.

Lots of stuff there to break down, but it looks like some of it has already played out (green checks), while some of it has distinctly not played out (red marks).

Blockworks founder Jason Yanowitz recently tweeted on a basic pattern for how bear markets play out, simplified into three phases:

  1. The Unwind, in which retail money flees the space, but the industry still feels hopeful
  2. The Capitulation, in which institutions are liquidated and holders become forced sellers
  3. Bottomless Exhaustion, with no bounces, narratives, and pure boredom

For the record, he says we’re in phase two.



Perfectly trading around tops and bottoms, if it’s possible at all, is achievable only by a minuscule percentage of people involved in crypto–theoretically, it’s nearly impossible to sell the top due to the fact that there’s very little liquidity there.

So the best advice is to not try to time one massive buy and hero-bid the market, just as it wasn’t the best idea to sell everything at a single price target.

Scale in, scale out. Building a position by dollar-cost-averaging in at this point will likely pay off if in a big way if you’re a long-term investor.


As we’ve seen with the Luna dump and now the Celsius liquidations, capitulations (holders giving in and selling) are violent, reflective pumps down. These bottoms are aggressive, painful, and will liquidate people on both sides of the trade.

They’re characterized by periods of high volume and volatility with big ‘wicks’ down and then a pump up–but that’s not how bear markets end. While capitulations might bring a respite, they don’t cause a bull market to resume or lead to a slow grind back up. These capitulations just mark the end of the beginning, when happy HODLers turn into forced sellers because of liquidations.

A few capitulations are highlighted below. Here’s the March 2020 $ETH capitulation.

And here’s a Bitcoin capitulation mid-cycle in 2021:



The harshest truth? We can’t just rip the bandaid off and get back to up-only mode. In crypto, bottoms have historically formed over months and years of consolidation. Take the bear market for Ethereum from 2018 to 2020:

The asset ranged in price from $80 to $365 for over two years. TWO YEARS! And it holds true for the $BTC chartt from 2014-2016, where Bitcoin pretty much hung out between $200 and $500 for nearly the same amount of time.

The roughest, harshest, realest truth for crypto bear markets, is that historically they’ve been just ridiculously painful, quiet, boring and long.

Is there opportunity? Absolutely. Bear markets create immense wealth for those who participate–but those wealth opportunities only come to those who stick around.