With total capital approaching $2 trillion, the cryptocurrency market has reached its highest level in nearly two years. They were emboldened this week by Bitcoin breaking above $50,000, giving analysts plenty of food for speculation as to why things might be different this time around in a crypto bull market scenario.
The market capitalization of virtual currencies was $1.97 trillion, the highest level since April 2022, when the situation changed significantly.
Fundamentals of the bull market in the virtual currency market
At the time, the cryptocurrency market had fallen from its $3 trillion peak in November 2021 and entered bear market territory. This time, they are coming out of a two-year crypto winter and have some fundamental factors not seen in previous cycles.
On February 12th, Thinkocracy Capital co-founder Daniel Chan said: predicted a good chance This bullish cycle ultimately looks like this:
“It is the largest in terms of market capitalization creation and the duration is longer than expected.”
He noted that this is the first time that a crypto bull market coincides with the start of the Fed's easing cycle. The U.S. central bank is struggling to keep inflation low and interest rates lower after two years of aggressive rate hikes.
Furthermore, he said that absent a severe macro shock, the cryptocurrency market remains in a “buy-on-the-moment” mentality. There has also been no interest from retailers, meaning the situation is still in its early stages. This week, BeInCrypto reported on bear market levels of social engagement and search activity for Bitcoin and cryptocurrencies.
read more: Bitcoin Halving Cycle and Investment Strategy: What You Need to Know
Additionally, crypto ETFs offer “persistent bidding on the asset class.” he added,
“Many large TradFi investment firms are starting to look beyond the big players.”
This year has also seen many stories and sub-sectors emerge in the cryptocurrency space. These include artificial intelligence hype, tokenization of real-world assets, re-staking, and more. Cheung said these factors could include:
“It helps drive sustainable wealth creation among investors in the asset class.”
Finally, he predicted a more aggressive regulatory approach given BlackRock's entry into the ecosystem. Additionally, many villains were wiped out in the previous cycle.
Bitcoin, which has returned to $50,000, is different.
February 13th, Bitcoiner “Mitchell” expressed his thoughts Why is $50,000 Bitcoin different this time? The last time this asset traded above $50,000 was in December 2021.
He commented that more than half of the BTC supply is “held in lettuce hands,” likely referring to retail traders who frequently buy and sell in a panic.
Read more: Bitcoin Price Prediction 2024/2025/2030
Additionally, FTX was still operational, as was the ultimately failed Terra/Luna project. He added that this was also the time of the fastest rate hike in U.S. history.
This time it's much different, with 70% of supply “in diamond hands” and passive Wall Street bidding through ETFs. With Bitcoin's halving just a few months away, interest rates are expected to be cut this year.
Retail FOMO has yet to occur while financial institutions are quietly piling up. So as this supercycle continues over the next year or so, prices will only go in one direction.
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