How did the Bitcoin bear market come about? Wall Street experts analyze the two main driving forces

Question

【Crypto World】Wall Street veteran Fred Kruger recently shared an interesting perspective: every bear market in Bitcoin is essentially triggered by two main factors.

One is at the macro level—the tightening of central banks like the Federal Reserve’s purse strings causes a sudden squeeze on global liquidity, leading to a decline in investors’ risk appetite, with Bitcoin being the first to be affected. The other is industry-specific shocks—black swan events such as exchange collapses and Ponzi scheme withdrawals—that directly trigger panic selling.

A quick review of history confirms this: the declines in 2011, 2017-2018, and 2021-2022 all corresponded with tightening monetary policies; meanwhile, the drop from 2013-2015 was clearly linked to the systemic shock caused by the Mt.Gox exchange bankruptcy. The logic is consistent.

Currently, Bitcoin is trading around $90,015, having fallen nearly 28.8% from its October peak. The main reasons behind this correction are most likely these two factors at play.

SelfStaking · Accepted Answer

Basically, it's the same old trick: when the central bank tightens liquidity, the crypto market has to die; if an exchange suddenly crashes, it's game over.

GrayscaleArbitrageur · Answer

That's correct, but he missed a key variable—the collective irrationality of retail investors. Macro factors and black swan events are just surface-level; the real bear market accelerator is emotional contagion, where one person panics and triggers ten others to run.

SchrodingerWallet · Answer

Talking about macro policies again? At the end of the day, if an exchange suddenly collapses, we have to step in and take over. No matter how short of money, we still have to cut losses.

liquiditea_sipper · Answer

Here comes the same macro liquidity + black swan theory again, I've heard it a hundred times... but it really hits the mark. When the Federal Reserve moves, the whole world trembles.

JustAnotherWallet · Answer

That's a good point, but I think there's still a missing piece — retail investors' sentiment tends to collapse much faster than large funds, and a small sell-off by one person can trigger a chain reaction... The current price level is indeed a bit awkward.

TokenomicsPolice · Answer

Just two points can explain all bear markets? This theory is too simplified; the real situation is much more complex.

That's a valid point, but don't overlook the third factor: retail investor psychology.

I've seen the Mt. Gox incident firsthand; it was indeed tragic. However, exchanges now have much stronger risk management controls.

The macro + black swan framework is okay, but its predictive ability is just so-so.

A 28.8% decline is probably a normal correction, nothing special—just part of the cycle.

MidnightTrader · Answer

That makes sense, but I think this guy also missed one point — retail investors' mentality collapsing should also be counted. When a big V calls for a short on the entire sector, everyone follows suit. This is even more intense than the central bank tightening.

DefiPlaybook · Answer

Basically, there are two sets of logic fighting each other: one is the macroeconomic tightening of the money supply, and the other is industry internal explosions. The former is invisible and intangible, while the latter is a bloody case study right there.

Honestly, I watched Mr. Gox's situation unfold in the live stream and saw people crying. Looking back now, it’s just so-so; it’s more like a lesson for later generations.

This 28.8% decline isn’t really a big deal; I’ve seen even harsher drops in history. It all depends on how the Federal Reserve will proceed next, because that will be the real game-changer.