Blockworks founder analyzes three stages of a bear market! Currently in "forced surrender" phase, any rebound is just a dead cat bounce

At the end of 2020, people in the cryptocurrency community were excited and jubilant as Bitcoin broke through the $20,000 mark. Today, the community is feeling anxious at the same price level. Jason Yanowitz, the founder of Blockworks, analyzed the narrative of different stages of a bear market during this price downturn, believing that we are currently in the most painful phase of the market.

This is a translation. For any doubts, please refer to the original text.

1/ In bear markets, it's crucial to remember why you're building.

I'd recommend reading the classics this week.

Here's a running list of my all-time favorites 🧵

— Yano 🟪 (@JasonYanowitz) June 13, 2022

Bear Market Phase 1: Market Eases

The excitement and greed from the bull market still linger. Occasional positive news continues to surface and last for several weeks. Assets remain above the baseline, valuations are adjusted downward, but companies are not making difficult decisions such as product elimination or layoffs, everything seems okay.

The first phase doesn't quite feel like a bear market, more like prices returning to fair valuation. Investors continue asset allocation, and developers keep working.

Overall, life is still good, only those with wavering faith choose to sell.

Bear Market Phase 2: Forced Surrender

This phase marks the beginning of an ugly atmosphere. Narratives disappear, prices drop by 90%, then another 90%, and companies initiate widespread layoffs.

Mainstream media and cynics rise in the second phase, laughing and saying, "I told you so!"

The LUNA incident propels the market into the second phase, where diamond hands must sell assets forcibly, not because they want to, but because they have to. Celsius doesn't want to sell, but they might have to.

More funds, companies, and retail investors will face similar situations as Celsius in this phase, and any rebound will immediately be met with selling pressure, known as a "dead cat bounce."

Companies needing to maintain high token prices will crumble. Founders buying their own tokens to sustain the project will also be crushed.

As prices drop, the bearish sentiment grows stronger, leading to a vicious cycle causing prices to plummet drastically.

Excitement will be replaced by anger.

Bear Market Phase 3: Endless Exhaustion

Endless exhaustion follows immense pain.

No rebounds, no narratives. Prices consolidate sideways or decline slowly, making the market quite dull.

Anger gradually gives way to silence at the bottom.

In this phase, you will want to leave this market. When emotions are low, regulators will kick us, your favorite Twitter degens will quiet down, Web2 investors will quietly stop asset allocation, talented developers will choose to leave, companies will shut down, and you will start questioning every assumption.

This phase is the hardest to survive. If you're a company, make every effort to get through it; if you're a developer, keep your interest alive and collaborate with other developers to build together; if you're an investor, develop your own arguments and bet on the people you believe in.

Don't lose sight of the bigger picture; we are building an open and permissionless world. This will take decades, not just a few years.

Close your computer, go for a walk, but never give up.