After months of “crypto winter”, the crypto bear market is finally looking like its at the tail end.
Having been through two bull and bear markets personally, I’m sharing my observations as to why this next cycle could possibly be the “last big one”. And some ‘traps’ that aspiring investors should be aware of.
3 Reasons Why We Are In The Final Season Of Major Crypto Cycles
1) Winning Ground in the Regulatory Battle
Since the release of the Bitcoin whitepaper in 2009 by Satoshi Nakamoto, cryptocurrency has identified fiat as its greatest enemy.
Today, cryptocurrency is facing its biggest regulatory battle.
For crypto to become mainstream, regulations will be one of the biggest challenges. Yet this hurdle is not one that will stop crypto, I believe crypto will overcome this and move on to the next.
Despite the regulatory hurdle, there is no stopping the community led growth. And as technology becomes integrated into our daily lives, crypto will become mainstream.
The only question is “wen”?
If you are not prepared for it, you might be left behind and find yourself struggling when the world has moved forward.
2) Maturity of Ethereum, Queen of Crypto
Ethereum introduced a functional layer to cryptocurrency. Instead of merely being a store of value, Ethereum enabled decentralized finance services, minting of NFTs and even verification of ownership via “token-gating”.
As any new technology, Ethereum faced its unique challenges. Naysayers were not convinced that Ethereum’s demand driven fees could allow mass adoption. But the community learnt from its challenges and continues to evolve.
The introduction of Layer 2s allows for lower cost transactions that offer the same security guarantees that made the Ethereum blockchain attractive. Polygon, Optimism and Arbitrium are some Layer 2 solutions leading the way for greater adoption of Ethereum, and by extension, cryptocurrency as a functional technology.
Today, Ethereum is considered the premium network with many web2 companies relying on it for their transition to Web3.
Ethereum’s progress shows the possibilities for mass adoption of crypto-driven Web3 technology. I believe we could see a wave of new users into crypto as the space continues to evolve.
3) The ETF Race Has Begun
If you have not noticed the news of numerous fund management companies applying for ETFs with the SEC, where have you been in the last 6 months?
Institutions such as Ark Invest, Greyscale and even the largest ETF provider, Blackrock, have applied for both Bitcoin and Ethereum spot ETFs.
Although the SEC had previously rejected these applications, institutions are starting to challenge the rejections. In September 2023, Greyscale sought the US Court’s assistance for SEC’s explanation on its rejection of their Bitcoin spot ETF application. This push is not just for the benefit of Greyscale but for the other applicants and the wider crypto space.
Today, the SEC is being forced by the judges and the US House lawmakers to move forward to approve ETF applications.
It’s now no longer a matter of “if” but “when” these ETFs will be made available for brokerages everywhere in the world.
But at this point, you may be wondering…
Is the Bitcoin Spot ETF Overhyped?
The spot Bitcoin (BTC) ETF has been hogging the headlines, and crypto natives are hyping the possibilities of these ETFs “opening of the floodgates” for liquidity to enter the crypto market.
Several events in October 2023 escalated the sentiments further, leading to the Bitcoin price surge:
- News that “seeding” of the ETF has begun at the start of the month by Blackrock. While seed capital represents an insignificant inflow for the ETF, it does show the intention that Blackrock has begun purchasing BTC and are now taking active steps to launch the ETF.
- On 24 Oct, Bloomberg Senior ETF Analyst Eric Balchunas tweeted that “BlackRock iShares Bitcoin Trust”, the name for their spot BTC ETF, had been listed on the Depository Trust & Clearing Corporation’s (DTCC) website under the ticker “IBTC.” Even though this has been listed since August, traders started pumping the prices of BTC upwards of 15% within the day.
Generally a Bitcoin pump would be seen as a bullish move as bull markets often would take off from there, but is it really time to get bullish?
This may surprise you, but I‘m leaning closer to a no.
Without a doubt, a spot BTC ETF approval would definitely bring large volumes of liquidity to enter the crypto market. However, in my opinion, it remains a speculation as approval has not been cleared. Should the SEC eventually reject these ETF applications, the market could crash again.
At the same time, the current macro financial environment and sentiments don’t point to a bullish situation happening yet.
It may be still too early to call this an end of the bear market.
I highly suggest investors to stay conservative and don’t over extend your exposure in the crypto space just yet.
In the meantime…Ethereum Pumps too
Blackrock remains on the offensive to bring crypto to the institutional and fund managers. They had just filed for another crypto ETF, a spot Ethereum (ETH) ETF, while waiting for their spot Bitcoin (BTC) ETF to be approved by the SEC.
When the news was announced, ETH climbed to as high as $2130 from $1910.
However, as a seasoned crypto investor, I know that this pump is again a hype and emotional pump. The Ethereum ETF hasn’t been approved yet and prices will come down once the market recognises that.
But this is good news, here’s why:
The Larger the Ship, the Harder it is to Rock the Ship
Regulations coming into place, increasing adoption of cryptocurrency by businesses and the looming success for ETFs all point to one thing: the ships that have left the port previously have returned after a major storm and are refueling and refitting.
You’ve not missed the boat yet. If you prepare well, you could be on the biggest crypto move of the decade.
The question now is, are you ready for the next sailing date?