0/ The question that is undoubtedly on top of every crypto investor's mind currently is: is the bull cycle over? In my view, this question is somewhat moot because judging by the magnitude of the correction (>40% for total mkt cap), we are already in a bear market.

1/ The reason people are still asking this question is because the correction was so swift and our frame of reference has not adjusted and we are still thinking about how soon we can revert to ATH prices.

2/ In my view, the more relevant questions we should be asking are: 1) if we are in a bear market, how far are we from the bottom? and 2) what does the risk reward tradeoff look like from here?

3/ Reframing the question this way allows us to think about what we should be doing with our exposure going forward instead of hoping we will somehow get back to ATH prices in the near term.

4/ A few things worth noting:
a) during this cycle, we did not get the blow-off top we typically get in a euphoric bull market which means that valuation weren't significantly de-tached from reality.

b) this cycle brought institutional participants into the market and institutions have different definitions of what good returns are ie. they are not batting for 1000% returns but are rather 100% return in a year is heroic by any measure.

c) this means that they are likely to take profits earlier and more frequently but likeless also more likely to step back in when they perceive that the correction is too much.

d) this may explain why we didn't see the blowoff top but it also means that the drop probably won't be as severe as past cycles. So instead of a typical 80+% drop, we may end up with a 50-70% drop.

e) this is how crypto markets become less volatile over time and the returns from the asset class also become less spectacular (but still much higher than most other asset classes).

5/ Using $BTC as a proxy,
50% down vs ATH = $32,440 (-3% from here)
60% down vs ATH = $25,952 (-22% from here)
70% down vs ATH = $19,464 (-42% from here)

6/ Note that $BTC has never dropped below its peak from a previous cycle. A 70% drop in BTC would also mean that the asset class is down 80+%, so low likelihood in my view.

7/ So in terms of quantifying the downside risk from here, my base case would be a further 20-30% down from here, with 40% being a worst case scenario.

8/ In terms of upside, I think a 3-5X return over a 3-4 year timeframe is conservative judging from: 1) returns generated in the latest cycle (20X for BTC); 2) more institutional capital flowing into crypto; 3) implied total mkt cap of $4.5-7.5 T (smaller than mkt cap of gold).

9/ Finally, if somehow this recent correction is but a short term detour within a continuing bull market, then we will likely see the 3-5x return realized in 6-9 months instead of 3-4 years.

10/ Whichever scenario we end up with, I would argue, the risk return is favorable mid-long term unless you are a short term trader who is optimizing for profits on a daily or weekly basis.