2024 started with a bang for the cryptocurrency market, where it has once again experienced a significant surge with Bitcoin (BTC) hitting the $48,000 mark for the first time in almost 2 years.
Interestingly, the current conditions are reminiscent of the bull run witnessed by the market back in December 2020. For instance, since the start of 2023, the market capitalization of the crypto sector has surged from $830 billion to over $1.8 trillion, showcasing a nearly 100% growth.
This recent uptrend has brought with it a renewed sense of optimism and potential for the market, as well as speculation that we are on the cusp of a major bull run.
Today we will analyze some of the factors at play that are directing the market’s upward trajectory to anticipate when the next bull cycle would be.
Crypto Market Reflects 2020-2021 Holiday Season Performance
Antoni Trenchev, the co-founder of crypto lending platform Nexo, believed that the price action reflected the 2020-2021 holiday period, which according to him was the precise moment that heralded the last major bull run.
He also noted that then the uptrend arrived a mere months before the Bitcoin halving event in April 2020. Similarly, this year the apex cryptocurrency is scheduled to undergo another block subsidy halving in April. This alongside the enthusiasm surrounding the recently approved Bitcoin spot exchange-traded funds (ETFs) could lead to an unprecedented surge in crypto prices.
Meanwhile, Jupiter Zheng, a partner at asset management firm HashKey Capital, said that while the holiday season does influence the market’s ongoing growth, there are other drivers to consider.
Like Trenchev, Zheng also pointed out the performance of the Bitcoin ETFs and the expansion of the Bitcoin ecosystem with the introduction of new layer-2 solutions. Most importantly, he noted that the US Federal Reserve’s change in stance from hawkish to dovish would have a significant impact on the crypto market.
Upcoming Crypto Bull Run Will Be Influenced By Macroeconomic Conditions
Ryan Lee, chief analyst at Bitget Research, believes that this time around the market is being heavily influenced by different macroeconomic factors, such as regulatory updates, technological advancements, and shifting investor sentiment.
He noted that the previous bull cycle was driven largely by the COVID-19 pandemic, which spurred quantitative easing that led to people spending more money on investments and institutions actively looking into crypto. Whereas, the upcoming run will be shaped by fluctuating inflation rates, changes in borrowing interest rates, and geopolitical tensions.
There are also additional factors like the drop in the 10-year US Treasury yield and a decrease in the US Dollar Index, which measures the dollar’s value relative to its major trading partners like the euro and yen. These circumstances have surely created a much more favorable environment for Bitcoin and other cryptocurrencies.
There are also some optimistic economic data coming out of the US that could bolster this trend, such as the country’s GPD outperforming expectations, while the Personal Consumption Expenditures (PCE) price index – which measures consumer spending on goods and services among US households – staying relatively stable throughout 2023.
Meanwhile, Zak Taher, the CEO of the digital asset division of MultiBank Group, does not anticipate crypto prices to rise any time soon. He explained that while short-term market movements can be influenced by various factors like greed index, sentiment, and market speculation, it is way more challenging to predict with certainty how the latest rally would evolve into a full-blown bull market scenario in the near to mid-term.
Institutional Interest Will Play Major Role In Dictating 2024’s Crypto Bull Run
However, Taher is optimistic about the crypto market as he believes that institutional interest and adoption of crypto assets will continue to play a pivotal role in dictating the next bull cycle. Additionally, this will provide legitimacy and stability to the market, especially across Europe and the Middle East.
Denis Petrovcic, co-founder and CEO of real-estate tokenization infrastructure provider Blocksquare, highlighted that Bitcoin’s recent 2-year high surge to the $49,000 mark combined with the listing and trading of spot Bitcoin ETFs might not sustain in the long-term.
He said that the market’s optimism might face challenges with the shifting geopolitical and economic landscape in 2024. However, he has hopes for the market shortly as ongoing policy shifts, inflation rate adjustments, and geopolitical events could have a positive influence on the price of BTC.
With the next Bitcoin halving scheduled for May 9, 2024, it is worth noting that the cryptocurrency’s price has shown a historical trend of peaking between 368 and 550 days after the event and then bottoming between 779 and 914 days later.
Although Bitcoin’s rally is showing signs of a slowdown, the crypto market is increasingly diversifying, with altcoins like Ether (ETH) and Solana (SOL) recording 19-month highs. Finally, there is the news that Brazil, one of the leading crypto economies in the world, is considering using cryptocurrencies for financial transactions among its G20 partners.
Such an event could increase global interest in the potential for cryptocurrencies and trigger a massive bull run.