Is the Bitcoin bear market over?

Bitcoin’s bear market from the record high of $20,000 reached in December 2017 ended at lows near $3,200 in mid-December 2018, with the Puell Multiple hitting a low of 0.30.

The indicator entered the green zone during the last leg of the bear market, which began on Nov. 14, 2018, when prices fell below the long-held support of $6,000 and slipped to $4,000 by Nov. 20. 

On that day, the Puell Multiple fell below 0.5, signaling undervaluation. The selling pressure ebbed in the following days, allowing recovery from $3,400 to $4,400 in the last week of November.

Is the Bitcoin bear market over?

While the bounce was short-lived, the sellers could not do much damage, as evidenced by prices bottoming out just $200 below November's low of $3,400 on Dec. 15. That’s when the Puell Multiple was hovering near 0.30. 

Going back more than half a decade, bitcoin’s downward move from the November 2013 high of $1,100 came to an end near $150 in January 2015. The Puell Multiple also bottomed out near 0.30 in mid-January. Similarly, the preceding bear market had ended in November 2011 with the indicator’s drop to 0.30.

The latest under-0.50 reading on the indicator suggests the worst is behind us. Other metrics like the market value to realized value (MVRV) Z-score are also indicating undervaluation. 

However, the cryptocurrency might not be out of the woods yet, as the Puell Multiple hasn’t dropped to 0.30 – the level which has marked bear market lows in the past. 

If history is a guide, we may see one more bout of selling, which could likely push prices back to the $5,000-$4,000 range and the Puell Multiple down to 0.30. 

"We can certainly retest recent lows once or twice," Mike Alfred, CEO of Digital Assets Data, told CoinDesk while adding that dips below $5,000 will be short-lived, courtesy of strong demand from long-term holders – investors who bought bitcoins before the massive rally from $6,000 to $20,000 seen in the fourth quarter of 2017 and during the last five weeks of 2018. 

Bitcoin is currently trading near $6,550, representing 69 percent from recent lows under $4,000. Prices hit a high of $6,907 early Friday, according to CoinDesk’s Bitcoin Price Index.