In the dynamic world of cryptocurrency investments, a burning question takes center stage: When will the next crypto bull run occur? While we stand at this juncture, a prudent strategy involves drawing parallels between the past bull market and the current landscape.
For numerous crypto investors, a pressing query revolves around the timing of the bull run. You might find yourself in a scenario where capitalizing during the 2021 bull market slipped through your grasp, or the potential for significant gains in the forthcoming surge has piqued your interest. It's vital to acknowledge that predicting the future with unwavering certainty remains a formidable challenge in the ever-shifting realm of cryptocurrencies. This is because history doesn't replicate itself exactly; rather, it unfolds in patterns and currents. This guiding principle informs our exploration as we seek to gauge potential timing through a retrospective lens. By delving into the annals of past bull markets, we aim to extract insights that could illuminate the likely course of events.
Bitcoin halving is a significant event that occurs in the Bitcoin blockchain approximately every four years. It's a pre-programmed event designed to control the issuance rate of new Bitcoins and ultimately limit the total supply of the cryptocurrency. During each halving, the reward given to Bitcoin miners for adding new blocks to the blockchain is cut in half. The reduction in the rate of new supply entering the market can lead to the belief that there might be a potential decrease in selling pressure, assuming that demand remains stable or increases. This perceived scarcity can create a bullish sentiment among investors and traders, possibly leading to upward price movements.
The most recent Bitcoin halving took place in May 2020. Historically, there have been two previous halvings: one in 2012 and another in 2016. If we follow the pattern of halvings occurring roughly every four years, the next halving might be expected around April of the year 2024.
The graph above illustrates the Bitcoin halving cycle, depicting an uptrend (green box), a downtrend (red box), and a sideways movement (blue box). Assuming that Bitcoin's lows will not be renewed in this cycle, Bitcoin is presently expected to remain within a sideways movement, represented by the blue box. There are approximately 7 months left until the anticipated next halving in April 2024. By following the pattern of the previous cycle, it becomes evident that the bull market has less than 7 months remaining, given its tendency to experience a low prior to the halving.
Positive news, media coverage, and general optimism contribute to a favorable sentiment among investors.
Market sentiment in the cryptocurrency space is often gauged through various indicators and data sources. While there isn't a single graph that encapsulates market sentiment, let's take a look at the popular fear and greed index.The Crypto Fear and Greed Index is a popular metric that combines different factors to determine whether the market is in a state of fear or greed. It aggregates social media, market volatility, volume, and more. You can showcase the index's value over time, highlighting shifts between fear and greed.
To gain insight into market trends, we've employed a novel approach by analyzing the 30-day mean of the daily BTC Fear and Greed Index. This smoothed approach provides a clearer picture of how market sentiment evolves over time. Examining the past cycles, intriguing patterns emerge. Following the BTC price's recovery from its 2018 bottom, the F&G Index surged, breaching the greed threshold in mid-2019. A subsequent decline occurred until the onset of the covid19 shock, precisely 475 days from the market bottom. This event triggered a 278-day period of significant F&G Index growth.Fast forward to the present, and it's been 420 days since the mid-2022 market bottom. The F&G Index currently rests in the neutral zone, slightly below the 50-mark. A noteworthy observation is that the sentiment rebound in 2023 has been less pronounced than the 2019 scenario. In a neutral context like this, it becomes evident that a potent resurgence hinges on the arrival of immensely positive news or other catalysts capable of elevating market sentiment.
Global liquidity refers to the availability of money and credit in the global financial system. It influences how easily individuals, institutions, and even governments can access funds for various purposes. One of the key metrics used to gauge global liquidity is the M2 money supply. M2 includes not only physical currency and demand deposits but also savings accounts, time deposits, and money market mutual funds. It is a broader measure of money that is readily available for spending and investment.
Global liquidity, as measured by M2, exerts a substantial influence on asset prices across various markets. The interplay between supply and demand for assets, interest rates, speculative behavior, and even currency values all stem from the level of liquidity in the financial system. Investors and policymakers closely monitor these dynamics to anticipate potential shifts in asset prices and make informed decisions.
BTC price also demonstrates a correlation with M2, much like other assets. In the graph above, the blue bars indicate changes in M2 across major countries, while the yellow line represents the trend in BTC/USD price. If we focus on the area within the red circle, highlighting BTC's local low, it becomes apparent that M2 Growth was also at a minimal level.
The adoption of cryptocurrency and blockchain has been a journey marked by both excitement and caution. Regulatory uncertainties, differing interpretations by governments, and concerns about potential legal implications have caused some to tread carefully. Despite the remarkable potential of blockchain technology and the allure of digital assets, market participants are keenly aware of the need for regulatory clarity to fully embrace these innovations. Nonetheless, crypto adoption is expected to continue.
Raul Pal, CEO of RealVision, has forecasted that the model, which draws a comparison between the growth in internet users since 1992 and the surge in cryptocurrency users since 2016, aligns precisely. The projection suggests that the count of cryptocurrency users will potentially reach 1.2 billion by December 2025. Furthermore, this trajectory implies a strong possibility that the ongoing expansion of cryptocurrencies could eventually surpass the global internet penetration rate of 43% in the future.
A pivotal moment on the horizon is the anticipation surrounding the approval of a Bitcoin (BTC) exchange-traded fund (ETF). If a spot Bitcoin ETF from mainstream financial institutions like BlackRock, Fidelity, and Schwab were to be approved by the SEC, it could provide credibility and trust for more people to experiment with crypto. It would provide a regulated channel for mainstream investors to enter the crypto market, potentially fueling widespread adoption. The anticipation of this approval has sparked discussions about the potential for increased institutional investment, liquidity, and an elevated status for BTC as a recognized asset class.
Innovations and advancements in blockchain technology can trigger excitement and investor confidence.In the initial stages, cryptocurrency primarily appealed to technology enthusiasts and innovators who had a genuine passion for its underlying technology. However, as this technology matures and evolves into a foundational infrastructure for transformative experiences, we can anticipate a substantial surge in user adoption. This broader acceptance and utilization will not only fuel the expansion of the cryptocurrency ecosystem but also trigger a wave of innovation. Consequently, both users and investors can anticipate a host of promising prospects.
The upcoming phase in the cryptocurrency journey is poised to introduce the most extensive user base ever witnessed, signifying the inception of a momentous transition from Web 2 to Web 3. This transformative shift will usher in the decentralization of the internet and the proliferation of decentralized applications. As an increasing number of users begin to recognize the advantages of a digital landscape characterized by enhanced security, transparency, and user control, the momentum toward Web 3 will only intensify.
Examining historical cycles, we find ourselves amidst the pre-halving recovery phase, positioned about 7 months away from the upcoming halving event. While the resurgence in market sentiment has yet to match the rebound witnessed in the last cycle, this discrepancy can be attributed to factors such as tightening global liquidity and lingering regulatory uncertainties. However, the march of progress in blockchain technology's development and adoption remains relentless. Additionally, the pivotal matter of BTC ETF approval looms on the horizon.
The certainty of whether the forthcoming cycle will replicate the same price surge as its predecessor remains uncertain. Yet, considering the projected economic conditions, the prospects surrounding ETF deliberations, and the continual advancement of technology, the scenario appears ripe for the recurrence of a BTC bull run.