The bear market is normally where delusional dreams get crashed. This is especially true in the crypto space. The level of speculation and mania that follows every new bull market is often astonishing to behold.

If you have not yet experienced at least one 4-year cycle of the crypto space, you would think that the new bull run will go on forever. The level of irrational exuberance is often shocking to new entrants to the space.

Traditional investments like real estate and stocks rarely if ever go up by multiples of percentages in a short period of one year. Yet often in the bull phase, this is exactly what happens in crypto. When the bear market starts, very few people are remotely prepared for it.

According to Blockworks’ Jason Yanowitz, here are the three stages of a crypto bear market.

At this stage, even the most experienced traders are uncertain about the state of the market. They know from experience that either the market has topped or is topping and have already been scaling it out for weeks if not months.

This is the stage where meme coins are being launched daily. Retail is still betting that they can make a killing before all hell breaks loose. The media is still talking about the new crypto paradigm and interviewing founders that have done extremely well.

The parabolic trend is truly over. Price crashes violently across the board. Coinmarketcap is truly a sea of red.

Highly leveraged entities like the recent case of 3AC are margin called. This sets a cascading series of defaults across the board. Bitcoin is already 60% plus down from its high, altcoins are in worse shape. Most altcoins at this point are 80% to 90% down from their all-time highs.

Some well-known scams and MLM-like coins have already imploded. Mainstream media is calling for government regulation, retail is running scared.

Sad stories of people that have lost their life savings, having bought in at the top. Any bounce in the market is sold into.

The market is truly scared. Talks are constantly about how low Bitcoin will drop. Meme coins are a long-forgotten story.

Crypto companies are laying off people by the hundreds and preparing for the worse as the price keeps going lower. Volume across the space is low and keeps getting lower.

Fundraising is nearly non-existent. Regulators are making examples of some individuals who got carried away during the bull phase. Eventually, the market will turn, but a majority of people are running scared at this point. Many talented people that joined during the hype phase have left.