Signs of the next crypto bull run?

In the year As we approach the end of 2023 and the beginning of 2024, the crypto market is experiencing a resurgence reminiscent of the December 2020 bull run.

The ongoing revival has brought new optimism and potential, with investors hoping for a big turnaround.

To this point, the market capitalization of the digital asset sector has grown from $831 billion to more than $1.8 trillion by the beginning of 2023, a growth of nearly 100%.

Thanks to this latest shift, it's only natural that people are starting to draw parallels between the past bull run and the holiday price action in the current market. However, is this similarity just a coincidence or are we seeing the cyclical nature of the crypto market at play?

Anthony Trenchev, co-founder and managing partner of the cryptocurrency lending company Nexo, believes that the continued price action reflects the 2020-2021 holiday period, he announced a prescient moment, the last major bull run before the cryptocurrency enters the mainstream. He added:

“At that time, the market's improvement was greater than the seasonal price increases. A few months before April 2020, Bitcoin stripped and drove the enthusiasm around crypto ETFs. [exchange-traded funds]This rally was indicative of an unprecedented surge in crypto valuation.

Now, at the tail end of the 2023-2024 festive season, Trenchev believes we find ourselves on the cusp of another exciting chapter.

“With the pre-‘Santa rally' flashing on the charts and Bitcoin halving for April 2024, we're optimistic about what could be another big rally, and the bulls are only heating up,” he said.

Circumstances surrounding crypto bull runs

Jupiter Zeng, a partner at institutional asset manager Hashkey Capital, told Cointelegraph that, without a doubt, while there are several holiday factors influencing the ongoing market growth – similar to what was seen a few years ago – there are other concomitant drivers to consider this time. Adding:

“Currently, spot BTC exchange-traded funds (ETFs) and the upcoming halving in 2024, along with the rapid expansion of the Bitcoin ecosystem, includes the introduction of new Layer-2 solutions and articles. Additionally, the shift in the Federal Reserve's stance from hawkish to dovish also had a positive impact on risk assets.

Expanding on Zeng's narrative, Ryan Lee, principal analyst at Bitgate Research, draws parallels between the 2020–2021 bull run and the current state of the crypto market, which is certainly relevant, as the market is being influenced by various macros. factors, including regulatory reforms, technological advances and investor volatility.

While it was shaped by exceptional circumstances, such as the Covid-19 pandemic, which prompted quantitative easing and institutional investment, this run-up was driven by volatile inflation, interest rate changes and geopolitical tensions, he noted.

Additionally, financial indicators such as a decline in the US 10-year Treasury yield and a decline in the US dollar index (a measure of the value of the US dollar against most of its major trading partners) have created favorable conditions for Bitcoin. BTC).

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Some optimistic economic data has emerged that further reinforces this trend, with US GDP coming in higher than expected, and the personal consumption expenditures (PCE) price index (a measure of consumer spending on goods and services among households in the US) remaining relatively stable in 2023. He showed moderation by remaining.

“The probability that the Federal Reserve will maintain its current policy stance through December has risen to more than 80%, providing relief to market pressures that have intensified in this year's challenging macroeconomic environment.”

Could we witness a crypto 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 cleanly.

Zach Thayer, CEO of Multibank Group's digital asset wing, told Cointelegraph that his team doesn't expect price hikes to start anytime soon, but given the current market conditions, it looks like a big rally is likely. Being in progress: “Short-term market movements due to various factors, including greed index, sentiment and market speculation, this rally is definitely predicted to turn into a full bull market in the near to medium term. Times are challenging.”

Although uncertain, Taher believes that increasing institutional interest and adoption will play a crucial role in shaping the next course and bringing legitimacy and stability to the market, particularly in Europe and the Middle East.

Denis Petrovich, founder and CEO of Blocksquare – a provider of token infrastructure for real estate assets – shared a somewhat similar sentiment, telling Cointelegraph that Bitcoin's recent surge past the $44,000 mark, coupled with growing interest in Bitcoin ETFs, could be even greater. Rather than a seasonal rally, historical trends show that such increases cannot be sustained in the long term.

Including possible policy changes in 2024, he said, “The market's optimism may face challenges with a changing global economic landscape.”

However, Lee is optimistic about the industry's near-term future, saying that ongoing policy shifts, inflation adjustments and geopolitical events will play a significant role in influencing Bitcoin's price.

“In particular, the predicted change in US monetary policy, which could lower the 10-year yield, looks promising for risky assets like cryptocurrencies,” he concluded.

Factors that may drive the next bull market

Between January 5 and January 10, 2024, the crypto market is awaiting a decision on the approval of the US spot BTC ETF. If approved, there could be a massive influx of money into the crypto market similar to what was seen after the first gold ETFs were approved in 2004. Additionally, the increasing likelihood of a Federal Reserve rate cut in 2024 is another important factor. Keep an eye on it as it could have major implications for the market.

It is worth noting that with the upcoming Bitcoin halving on May 9, 2024, the price of the digital asset tends to peak between 368 and 550 days after the event and then bottom between 779 and 914 days. This cyclical behavior plays an important role in driving investor sentiment, so it is an important trend to monitor.

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In addition, China's initiative to internationalize the renminbi represents a major shift in global financial dynamics, which may affect both traditional and digital currencies. At the same time, the cryptocurrency market is showing signs of divergence, with altcoins such as Ether (ETH) and Solana SOL (SOL) clearly showing signs of stalling as Bitcoin's rally hits a 19-month high.

Finally, in a much broader context, the consideration of Brazil's growing financial transactions for digital currencies in the G20 shows the growing potential demand for digital currencies.

This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.