2024 is off to a rough start for the cryptocurrency market, with another big rally as Bitcoin (BTC) hits $48,000 for the first time in almost 2 years.
Interestingly, today's conditions are reminiscent of the December 2020 market rally. For example, since the beginning of 2023, the market capitalization of the crypto sector has increased from $830 million to more than $1.8 trillion, showing an increase of almost 100%.
This recent uptrend has brought a renewed sense of optimism and potential to the market, along with talk that we are on the verge of a major rally.
Today, we'll look at some of the factors that contribute to the market's upward trajectory in order to predict when the next bull cycle will occur.
The crypto market has summarized the results of the 2020-2021 holiday season.
Anthony Trencho, co-founder of crypto-lending platform Nexo, believes the price action reflects the 2020-2021 holiday period, which he says is when he predicted the last big rally.
He also noted that the uptrend occurred a few months ago when Bitcoin doubled in April 2020. Apex is also slated to halve crypto funding by April this year. This, along with the excitement surrounding recently established exchange-traded funds (ETFs), could lead to an unprecedented surge in cryptocurrency prices.
Meanwhile, Jupiter Zheng, a partner at asset management firm HashKey Capital, said that while the holiday is influencing the current market rally, there are other factors to consider.
Like Trenchow, Zheng also pointed to the effectiveness of the Bitcoin ETF and the expansion of the Bitcoin ecosystem by introducing new Layer 2 solutions. Most importantly, he noted that the transition of the US Federal Reserve System from hawkish to dovish will have a significant impact. cryptocurrency market
Macroeconomic conditions will depend on macroeconomic conditions
Ryan Lee, senior analyst at Bitget Research, believes that the market is heavily influenced by a number of macroeconomic factors such as regulatory updates, technological advancements and changing investor sentiment this time around.
He noted that the previous growth cycle was largely fueled by the COVID-19 pandemic, which led to quantitative easing, which led to people spending more money on investments and institutions exploring the crypto asset. And the future will be determined by fluctuations in inflation rates, changes in loan interest rates and geopolitical tensions.
There are also additional factors, such as a drop in the US 10-year Treasury yield and a decline in the US dollar index, which measures the dollar's value against its major trading partners such as the euro and the yen. These circumstances have certainly created a much more favorable environment for Bitcoin and other cryptocurrencies.
There is also good economic data coming out of the US that could support this trend, as while the country's GDP beat expectations, the Personal Consumer Expenditure (PCE) price index, which measures US household spending on goods and on services remains unchanged. . is relatively stable until 2023.
Meanwhile, Zach Taher, CEO of MultiBank Group's digital assets division, doesn't expect cryptocurrency prices to rise anytime soon. He explained that while short-term market movements can be influenced by various factors such as greed indices, sentiment and market speculation, it is much more difficult to predict with certainty how the recent rally will play out in a straight bull market scenario. around the middle
Institutional interest will play a big role in 2024.
However, Taher is optimistic about the cryptocurrency market, believing that institutional interest and adoption of crypto assets will play a key role in determining the next bull cycle. It will also ensure market legitimacy and stability, especially in Europe and the Middle East.
Denis Petrovcic, co-founder and CEO of real estate tokenization infrastructure provider Blocksquare, emphasized that Bitcoin's recent two-year rally to $49,000, as well as the listing and trading of Bitcoin ETF designs, may be unsustainable in the long term.
He said the market's optimism could be challenged in 2024 by changing geopolitical and economic landscapes. However, he is bullish on the short-term market as ongoing policy changes, inflation adjustments and geopolitical events can have a positive impact on the BTC price.
Since Bitcoin's next doubling is scheduled for May 9, 2024, it is worth noting that the price of the cryptocurrency has shown a historical upward trend between 368 and 550 days after the event and between 779 and 914 days after the event.
While Bitcoin's growth is showing signs of slowing, the cryptocurrency market is becoming more diversified, with altcoins such as Ether (ETH) and Solana (SOL) hitting 19-month highs. Finally, there are rumors that Brazil, one of the world's leading cryptocurrencies, is considering using cryptocurrencies for financial transactions between G20 partners.
This event could increase global interest in the potential of cryptocurrencies and lead to massive growth.