As we approach November 2023, it’s worth remembering that it will mark two years since Bitcoin’s all-time high and the general peak of the crypto markets. Some claim we have been in a two-year bear market since that time, whereas others point to BTC being so far off the lows recorded in the winter of 2022 that we cannot claim to be in the Crypto Winter.
However, regardless of where you stand on that particular argument, there are certain areas of crypto where we see consensus. Most notably, we are in the accumulation phase for BTC and alts, and that the bull market will return in the next year or so. 2023 is for accumulation, 2024 is the markup phase, and 2025 will see the peak bull run. You’ll see a lot of crypto experts and influencers talking about a blow-off top that should come in late 2024 or early 2025.
At the end of this thread I will leave you with what you have been all waiting for?
— ParabolicPump (@ParabolicPump) March 5, 2023
My longterm outlook on $AZERO !
2023 Accumulation phase
2024 Mark up phase
2025 Blow off top and distribution
Of course it's just a general outlook but this is what I'm expecting! pic.twitter.com/HztRAWErx9
There are markers for this, including the Bitcoin halving (April 2024) and the potential approval of Bitcoin Spot ETFs by the United States SEC, which Bloomberg currently rates as having a 90% chance of approval by January 2024. There are other catalysts, too, ranging from Chainlink’s integration into the global banking system to a successful resolution of Ripple/XRP’s own legal battle with the SEC.
Traders and investors learn from each other
Yet, markets can surprise traders more often than not. And one might argue that many of those predicting the next crypto bull are predicating it on many assumptions. Moreover, crypto investors may reinforce these assumptions by way of the echo chamber. The consensus is repeated and strengthened, and it becomes almost accepted as fact.
Of course, none of this is unique to crypto. If you look at the tools and trading info of an Australian online broker like AvaTrade, you’ll see one of the most prominent features is a social tool, AvaSocial, in this case. The idea is that traders connect and copy each other, sharing ideas and ultimately building a consensus for the markets. It is the same in every type of trading environment. However, our echo chamber might be a little more tight-knit in crypto.
Now, the point of this exercise is not to dismiss the chances of the 2025 blow-off top and everything in between. Rather, it’s to play devil’s advocate and look at the reasons we may be wrong. Below are some plausible factors that could delay the much-wanted 2024/2025 bull market.
- A global recession. High inflation, economic troubles in China, unrest in the Middle East, and the ongoing war in Ukraine are just some of the factors that could contribute to a global recession, perhaps as early as next year. Crypto has never experienced such conditions before, and nobody knows how it will react.
- Retail does not return. The assumption is that retail investors will return in 2024 as markets pick up, engaging in FOMO (fear of missing out) buying as price action rises. Yet, this is an assumption that assumes retail investors have plenty of money sitting on the sidelines. Moreover, it overlooks the fact that many retail investors got burned badly in the wake of the Terra Luna and FTX collapses.
- ETF approvals are a “nothing burger”. On Friday, 13th October 2023, crypto traders were all waiting for the SEC to appeal a court decision on Grayscale’s Spot ETF transfer. The appeal never came, providing more consensus that the body will eventually greenlight the ETFs applied for by trillion-dollar asset managers like BlackRock. But Bitcoin’s reaction to the news was tepid, leading some to say the ETFs are already priced in. It’s not certain that they will be approved at all, but there is always the chance that they move the markets little, if at all. Worse still, ETF approvals could be a “sell the news” event.
- The Four-Year Cycle is broken. Much weight is put on Bitcoin’s Four-Year Cycle, which sees the Halving as a pivot for the next bull run. It happened in 2012, 2016, and 2020, so why not 2024? Sure, mining rewards will be halved to 3.125 per block, putting less inflationary pressure on the market, but that must be counterweighted with demand. We assume it will, but “assuming” can get investors into trouble.
These are only four examples of factors that could impact the consensus of a new crypto bull run. In truth, there are several more, including regulatory factors. There is also the chance of a “Black Swan” event, which could be anything from an outbreak of war across the Middle East linked to the Israel and Palestine conflict to the collapse of the world’s largest crypto exchange, Binance.
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Markets constantly surprise us all
Again, we stress that our desire here is not to dismiss the chances of a bull run and blow-off top but to point out that market cycles can be broken. Two years ago, the crypto had a market cap of around $3 Trillion (USD), and today it is around one-third of that. That figure was reached in November 2021 at a time when interest rates were close to zero, central banks were printing trillions, and many retail investors were receiving furlough cheques. Sat at home in lockdown with disposable income, they pumped the markets to all-time highs. In 2024/25, many of those factors that acted as catalysts will not be present. New use cases for crypto, institutional adoption, and good old-fashioned FOMO might see us exceed those highs again, and they may perfectly align with expectations. But anything can happen in financial markets, crypto most of all.
