The next crypto bull run will look nothing like the last one, and investors should tame their expectations of an imminent rocketing of cryptocurrency prices.
At least that’s what Lars Seier Christensen, founder of enterprise blockchain Concordium, told Cointelegraph in a recent interview.
As the majority of the crypto market looks to the swathe of proposed spot Bitcoin (BTC) exchange-traded funds with bullishness, Christensen is doubtful their approval will be an immediately meaningful driver for the crypto markets.
“Even if you do get a Bitcoin rally, I don’t think you should naturally assume that everything is going to rally with it.”
“Does that necessarily mean that Ethereum and a lot of the older altcoins are going to rally on the back of it too? I think that’s nearly certain not going to happen,” he added.
NEXT DATES TO WATCH:
Middle of October are the next major days to watch. Namely October 16th. (& @GlobalXETFs’ Oct 7)
Also, reminder that we fully expected delays on this round of spot #Bitcoin ETF filings. Would have been a shock if they were approved this week. pic.twitter.com/i14fg8FWun
— James Seyffart (@JSeyff) August 31, 2023
Christensen said that, while digital asset prices have dampened over the last 18 months, in contrast, there’s an unabated interest in blockchain technology from the corporate side.
This means that the next big step for the industry won’t be marked by a particularly “sexy” rally, where prices of crypto assets surge like they did in 2021 — but rather a more subdued growth that will occur gradually over the next 18 months, noting:
“The only reason corporate types need a crypto asset is in order to execute what they want to do on a given blockchain. So, I think it’s very clear that you need to be aware that they’re not in desperate need for a given crypto to increase significantly in value.”
Not everyone would be inclined to agree with Christensen, however.
Ben Simpson, founder of crypto education platform Collective Shift, said there’s a wealth of data and indicators that suggest that we’re already witnessing the initial stages of a Bitcoin bull market.
“The drawdown from the all-time high chart and market-value-to-realized-value ratio suggest we’re in the final stages of accumulation, often a precursor to a bull market,” explained Simpson.
When it comes to the assets most primed for a major boom, Simpson believes the next bull market will blow wind into the sails of Bitcoin, Ether (ETH) and application-specific tokens and sectors such as gaming.
“DeFi tokens are risky but offer significant upside, and Bitcoin, I believe, emerges as the ’silent winner’ amid broader adoption and one I’m most bullish on.”
“A Bitcoin ETF won’t have any impact on the price” pic.twitter.com/ArSTwskEec
— Ben Simpson (@bensimpsonau) September 13, 2023
The last two-year period has been tough for the crypto industry. An increasingly hawkish Federal Reserve combined with a number of high-profile collapses, including the likes of FTX and Celsius Network, have seen investment in the industry dwindle, bringing down the prices of crypto assets along with it.
With the United States Federal Reserve deciding to press pause on any interest rate hikes earlier in the week, eToro Markets analyst Josh Gilbert views the broader macro outlook with a sense of optimism.
BREAKING : THE FEDERAL RESERVE HAS JUST PAUSED IT’S INTEREST RATE HIKES AND WILL KEEP INTEREST RATES AT THE CURRENT LEVEL pic.twitter.com/meRkOhhWfh
— GURGAVIN (@gurgavin) September 20, 2023
“We’ve finally got an improving macro environment with rate cuts on the horizon from central banks globally. As rates begin to fall and inflation subsides, investors will take on more risk, deploying more capital into financial markets — and crypto will be front and center,” he said.
Like many market commentators in recent months, Gilbert asserted that next year looks primed for a rally.
“2024 could be a strong year for Bitcoin and the broader crypto market. The Bitcoin halving is the centerpiece of this theory, and it’s the major catalyst optimistic investors are focused on.”
However, Tina Teng, a market analyst from CMC Markets, explained that it’s far too early to start worrying about whether or not massive gains are on the horizon. Instead, investors should be bracing themselves for a new wave of uncertainty.
Related: China suffers worst capital flight in years, but could it pump Bitcoin?
“It’s too early to say that it’s the start of a bull market in crypto. This would depend on the macro environment and hinge on whether or not central banks are willing to end their rate hike cycles to provide enough liquidity to the markets,” said Teng, adding:
“Tightening monetary policy is behind the decline in riskier asset classes, such as startups, small caps and cryptocurrencies. In history, the cryptocurrency market’s boom happened during the Fed’s rate cut cycle but not a hiking cycle.”
“The rampant government bond yields and inverted bond yields repeatedly flash warning signals for economic uncertainty ahead.”
#Bitcoin is racing down to realized loss on the 50-day moving average of the RPV ratio.
And if previous cycles tell us anything, this is the last time it happens until the next cycle top!
Each cycle, Bitcoin makes a… pic.twitter.com/Rrw7wYKbvA
— CryptoCon (@CryptoCon_) September 1, 2023
Teng said that for an imminent bull market thesis to be validated, Bitcoin needs to break through the 50-day moving average and catch a ride on another surge upward.
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