On Wednesday, November 6, Bitcoin reached new all-time highs (ATH), surpassing $75,000 and approaching the long-awaited bull run in the cryptocurrency market. By the end of last week, Bitcoin closed with a remarkable performance of +16.8%, fueled by the political victory of Donald Trump in the U.S. elections. As of today, Bitcoin is trading above $82,000, signaling a bullish momentum for the market.
This new ATH for Bitcoin also places the cryptocurrency above its previous ATH when adjusted for inflation, a key indicator that adds further weight to the optimism surrounding the crypto sector. As Bitcoin surges, it’s not just the world's largest cryptocurrency benefiting. The question is: are we on the verge of a full-fledged bull run in the crypto market, and is history about to repeat itself?
The cyclical nature of Bitcoin’s price movements is well-documented. Historically, the bull run phase begins about four years after Bitcoin reaches new all-time highs, closely following the event of a Bitcoin halving, which reduces the rate at which new Bitcoin enters circulation. In past bull cycles (2013, 2017, and 2020), Bitcoin has broken new records roughly 200-250 days after the halving, with the top of the market usually occurring between 365 and 500 days after the halving event.
The current market conditions suggest that we might be nearing the point where the crypto sector sees its next parabolic surge. If history repeats itself, the next peak of the market could occur in Q2 2025, around 500 days after Bitcoin's last halving event in April 2024.
Another crucial factor to watch when assessing the onset of a bull run is the total market capitalization of the entire cryptocurrency sector, which encompasses Bitcoin, altcoins, and stablecoins. Currently, the total crypto market capitalization stands at $2.73 trillion, just 9% shy of its all-time high of $3 trillion from 2021. Historically, the most speculative and profitable phase of a bull run occurs after the previous market cap ATH has been surpassed.
While the total market cap has yet to breach the 2021 high, the fact that it is so close suggests that the stage is set for a breakout. Many analysts believe that a definitive bull run may still be a few days away, but the overall outlook remains positive.
Bitcoin's market dominance is another key indicator that can help confirm the onset of a bull run. Currently, Bitcoin dominates 59.30% of the total crypto market, and it is likely that we will see a further rise above 60% in the short term. However, once Bitcoin's dominance peaks and begins to decrease, this could signal the beginning of the much-anticipated “altseason,” a period where altcoins typically see rapid price increases.
The 50-period exponential moving average (EMA) on the weekly time frame is another critical level to watch. If Bitcoin's dominance breaks below the EMA 50, it may signal the start of altcoin rallies, marking a distinct phase in the bull market.
In addition to the historical patterns of Bitcoin’s price cycles, a game-changing development has occurred in the crypto market: the introduction of Bitcoin exchange-traded funds (ETFs). In just one year, Bitcoin ETFs, such as the BlackRock Bitcoin ETF (IBIT), have gained immense popularity among institutional investors. In fact, the AUM (assets under management) of the IBIT ETF has surpassed that of BlackRock’s gold ETF (IAU), which has been trading for over 20 years. This unexpected success of Bitcoin ETFs highlights a growing institutional appetite for digital assets and suggests that we are entering a new phase of adoption.
The fact that Bitcoin ETFs have now become a key component of the market provides a level of institutional credibility that was absent in previous bull cycles. This could potentially lead to a more sustained and powerful bull run, both in terms of time and price performance. Some analysts are even suggesting that Bitcoin’s price could rise above $200,000 during this cycle, driven by the increasing involvement of institutional investors.
With institutional money flowing into Bitcoin and the overall market capitalization approaching ATH levels, there are whispers of a “supercycle” in the crypto space. This term refers to the idea that the next bull market could be different from previous cycles due to increased mainstream adoption, institutional participation, and the introduction of new financial instruments like Bitcoin ETFs. If this theory holds true, we could see Bitcoin and the crypto market experience a prolonged and more intense rally than in previous cycles.
However, it’s important to remain cautious and not take anything for granted. The market dynamics are changing, and the introduction of Bitcoin ETFs is a relatively new development. The impact of these financial products on the broader market is still unfolding, and it will be essential to monitor capital flows into these ETFs to gauge the true strength of the upcoming bull run.
As Bitcoin soars to new heights and the crypto market capitalization nears its previous ATH, the signs of a bull run are unmistakable. While we may still have to wait a little longer for the final confirmation, historical patterns, Bitcoin's market dominance, and the increasing influence of institutional investors all point to the possibility of a significant bull market in the near future.
The introduction of Bitcoin ETFs and the growing interest from traditional finance institutions only add to the bullish narrative, with some analysts even forecasting a “supercycle” that could push Bitcoin’s price above $200,000. As always, however, investors should remain vigilant and continue monitoring key indicators like Bitcoin’s dominance and market cap movements, as the crypto sector is still subject to volatility and rapid changes.
In any case, the crypto bull run appears to be on the horizon, and the next few months will likely provide crucial insights into the timing and magnitude of this market cycle.
November 2024, Cryptoniteuae