As 2023 comes to an end and 2024 begins, the cryptocurrency market is once again reviving, reminiscent of the bull run witnessed in December 2020.
The ongoing revival has brought a new sense of optimism and potential, leaving investors hoping for a major turnaround.
Up to this point, since the beginning of 2023, the market capitalization of the digital assets sector has exploded from 831 billion to more than 1.8 trillion dollars, thereby representing a growth of nearly 100 billion USD. %.
Thanks to this recent uptrend, it is natural that people are starting to see similarities between the holiday price action of the most recent bull run and the current market. However, is this similarity just a coincidence or are we witnessing the cyclical nature of the cryptocurrency market at play?
Antoni Trenchev, co-founder and managing partner at crypto lending firm Nexo, believes that the ongoing price action reflects the 2020–2021 holiday season, which he marks as a foreboding, foreboding time. the last major bull run before cryptocurrencies enter the mainstream. He added:
“Back then, the market going up wasn’t just about seasonal price increases. Coming just months before Bitcoin’s April 2020 halving and riding a wave of enthusiasm around cryptocurrency exchange-traded funds (ETFs), this price rally is a harbinger of an unprecedented rise in prices. ever in cryptocurrency valuation.”
Now, at the end of the 2023–2024 festival season, Trenchev believes we are on the cusp of something else exciting.
“With the early Santa Rally already on the charts and the Bitcoin halving expected in April 2024, we are optimistically ready for what could be another bull run and the bullish trend is only just started,” Trenchev said.
Circumstances surrounding the cryptocurrency bull run
Jupiter Zheng, partner at institutional asset manager HashKey Capital says that while there are certainly some holiday factors influencing the ongoing market growth – like what has been seen for several years first – but there are other peripheral factors to consider this time around, in addition:
“We are now about to introduce spot BTC exchange-traded funds (ETFs) and the upcoming halving event in 2024, along with the rapid expansion of the Bitcoin ecosystem, including the introduction of New layer 2 solutions and inscriptions. Additionally, the change in the US Federal Reserve’s stance from hawkish to dovish also had a positive impact on risk assets.”
Expanding on Zheng’s story, Ryan Lee, chief analyst at Bitget Research, believes that, while the similarities between the 2020–2021 bull run and the current crypto market scenario are certainly useful, but this time, the market is being heavily influenced by various macro conditions including regulatory updates, technological advancements and changing investor sentiment.
Ryan Lee notes that, while the most recent rally was shaped by specific circumstances such as the COVID-19 pandemic, which spurred quantitative easing and institutional investment, this one has driven by fluctuating inflation rates, changing interest rates and geopolitical tensions.
Additionally, financial indicators such as the US 10-year Treasury yield fell and the US Dollar Index (a measure of the value of the US dollar relative to the majority of its important trading partners) fell. its most important) has created a favorable environment for Bitcoin.
Further reinforcing this trend, some upbeat economic data has emerged, with Lee noting that US gross domestic product has far exceeded expectations, while the Consumer Expenditures price index has Personal Consumption (PCE) (a measure of consumer spending on goods and services among households in the United States) has alsoshown moderation, remaining relatively stable throughout 2023. Lee added:
“The likelihood of the US Federal Reserve maintaining its current policy stance through December has increased above 80%, helping to ease growing capital market pressures due to a challenging macroeconomic environment in this year”.
Could we see a cryptocurrency rally in the coming weeks?
While the ongoing price action is certainly promising, the market still seems unable to clear the $1.7 trillion threshold clearly.
CEO Zak Taher of MultiBank.io – the digital assets division of MultiBank Group – says that Zak Taher’s team does not predict a price spike anytime soon, but given current market conditions, a major recovery appears likely. can happen: “Although short-term market movements can be influenced by many different factors, including greed index, market sentiment and speculation, it can still be predicted with certainty Whether this recovery develops into a full-blown bull market closer to mid-year is the challenge.”
Despite the uncertainty, Taher believes that growing institutional interest and acceptance will continue to play a key role in shaping the next step forward and bringing legitimacy and stability to markets, especially across Europe and the Middle East.
Denis Petrovcic, co-founder and CEO of Blocksquare – a provider of tokenization infrastructure for real estate assets – shared a similar view, saying that, while Bitcoin’s recent price surge surpassed the 44,000 mark Dollar combined with growing interest in the Bitcoin ETF may not be just a seasonal surge, historical trends suggest such gains may not be sustained..
Denis Petrovcic says:
“Market optimism may face challenges with the changing global economic landscape, including potential policy changes in 2024.”
However, Lee remains optimistic about the short-term future of the industry, saying that ongoing policy changes, inflation rate adjustments and geopolitical events will likely play an extremely positive role in the future. affecting Bitcoin price.
Denis Petrovcic concludes:
“It is worth noting that the forecast change in US monetary policy, which could reduce 10-year yields, looks promising for risk assets such as cryptocurrencies.”
Factors likely to fuel the next bull market
From January 5 to January 10, 2024, the cryptocurrency market is waiting for a decision on the approval of the US BTC spot ETF. If approved, there could be a large influx of capital into the cryptocurrency market similar to what was witnessed after the first gold ETFs were approved in 2004. Furthermore, the possibility of the Federal Reserve The growing increase in interest rate cuts by the US Federal Reserve in 2024 is another important factor to watch out for, as it could have a significant impact on the markets.
With the next Bitcoin halving scheduled for May 9, 2024, it is worth noting that the price of the digital asset has shown a pattern of peaking between 368 and 550 days after the event and thereafter. bottomed out between 779 and 914 days later. This cyclical behavior is an important trend to watch as it plays a key role in driving investor sentiment.
Furthermore, China’s renminbi internationalization initiative represents a significant shift in global financial dynamics, potentially affecting both traditional and digital currencies. At the same time, the cryptocurrency market is showing off its diversity, as evidenced by altcoins like ETH and SOL hitting 19-month highs, even as Bitcoin’s bull run shows signs of pausing.
Finally, in a much broader context, Brazil is increasingly considering the use of digital currencies for transactions finance in the G20 reflects growing global interest in the potential of digital currencies.
