Signs of the next crypto bull run?

As 2023 drew to a close and with the start of 2024, the crypto market is once again experiencing a resurgence, one that is reminiscent of the bull run witnessed back in December 2020. 

The ongoing revival has brought with it a renewed sense of optimism and potential, with investors hoping for a major turnaround.

To this point, since the start of 2023, the market capitalization of the digital asset sector has boomed from $831 billion to over $1.8 trillion, thereby showcasing a growth of nearly 100%.

Thanks to this recent uptrend, it is but natural that people have started drawing parallels between the holiday price action of the last bull run and the current market. However, is this resemblance merely coincidental, or are we witnessing the cyclical nature of the crypto market at play?

Antoni Trenchev, co-founder and managing partner at cryptocurrency lending company Nexo, believes that the ongoing price action reflects the 2020–2021 holiday period, which he marked as a prescient moment, heralding the last major bull run before cryptocurrency entered the mainstream. He added:

“Back then, the market’s upturn proved to be far more than merely seasonally uplifted prices. Arriving mere months before the April 2020 Bitcoin halving and riding the wave of enthusiasm around crypto ETFs [exchange-traded funds], this rally was a harbinger of an unprecedented surge in crypto valuations.”

Now, at the tail end of the 2023–2024 festive season, Trenchev believes that we find ourselves on the cusp of another exciting chapter.

“With an early ‘Santa Rally’ already glimmering on the charts and the Bitcoin halving slated for April 2024, we are optimistically poised for what could be another surge, and the bulls are only just warming up,” he said.

Circumstances around crypto bull runs

Jupiter Zheng, partner at institutional asset manager HashKey Capital, told Cointelegraph that, while there are undoubtedly several holiday factors influencing the ongoing market growth — akin to what was witnessed a couple of years ago — there are other peripheral drivers to consider this time around, adding:

“Currently, we have the looming introduction of spot BTC exchange-traded funds (ETFs) and the upcoming halving event in 2024, along with the rapid expansion of the Bitcoin ecosystem, which includes the introduction of new layer-2 solutions and inscriptions. Additionally, the change in the Federal Reserve’s stance from hawkish to dovish also has had a positive impact on risky assets.”

Expanding on Zheng’s narrative, Ryan Lee, chief analyst at Bitget Research, believes that, while drawing parallels between the 2020–2021 bull run and the current crypto market scenario is certainly helpful, this time around, the market is being heavily influenced by different macro conditions, including regulatory updates, technological advancements and shifting investor sentiment.

He noted that, while the last bull run was shaped by specific circumstances, like the COVID-19 pandemic, which spurred quantitative easing and institutional investments, this run is being driven by fluctuating inflation rates, interest rate changes and geopolitical tensions.

Additionally, financial indicators like the drop in the U.S. 10-year Treasury yield and a decrease in the U.S. Dollar Index (a measure of the U.S. dollar’s value relative to the majority of its most significant trading partners) have created a favorable environment for Bitcoin (BTC).

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Further bolstering this trend is some optimistic economic data that has emerged, with Lee noting that the U.S. gross domestic product has outperformed expectations, while the Personal Consumption Expenditures (PCE) price index (a measure of consumer spending on goods and services among households in the U.S.) has also shown moderation, staying relatively stable all through 2023. He further added:

“The likelihood of the Federal Reserve maintaining its current policy stance into December has risen above 80%, providing relief to market pressures that have been intensified by this year’s challenging macroeconomic environment.”

Could we witness a crypto rally in the coming weeks?

While the ongoing price action is certainly promising, the market still seems to have not been able to break past the $1.7-trillion threshold cleanly.

Zak Taher, CEO of MultiBank.io — the digital asset wing of the MultiBank Group — told Cointelegraph that his team didn’t anticipate prices to start skyrocketing anytime soon, but given the current market conditions, it does seem as if a major rally may be in the offing: “While short-term market movements can be influenced by various factors, including the greed index, sentiment and market speculation, predicting with certainty whether this rally will evolve into a full-blown bull market in the near to mid-term is challenging.”

Despite the uncertainty, Taher believes that the increasing institutional interest and adoption will continue to play a pivotal role in shaping the next run and providing legitimacy and stability to the market, particularly across Europe and the Middle East. 

Denis Petrovcic, co-founder and CEO of Blocksquare — a tokenization infrastructure provider for real-estate assets — shared a somewhat similar sentiment, telling Cointelegraph that, while Bitcoin’s recent surge past the $44,000 mark combined with a growing interest in Bitcoin ETFs might be more than just a seasonal rally, historical trends suggest such surges may not sustain in the long-term.

“The market’s optimism might face challenges with the shifting global economic landscape, including potential policy shifts in 2024,” he said.

However, Lee remains optimistic about the industry’s near-term future, stating that ongoing policy shifts, inflation rate adjustments and geopolitical events will likely play a crucially positive role in influencing Bitcoin’s price.

“Notably, a forecasted shift in U.S. monetary policy, which may lower the 10-year yield, appears promising for risk assets like cryptocurrencies,” he concluded.

Factors that will potentially drive the next bull market

Between Jan. 5 and Jan. 10, 2024, the crypto market is anticipating a decision on the approval of a U.S. spot BTC ETF. If approved, there could be a major influx of funds into the crypto market akin to what was witnessed after the approval of the first gold ETFs back in 2004. Furthermore, the increasing likelihood of a Federal Reserve rate cut in 2024 is another critical factor to keep an eye on, as it could have significant implications for the market.

With the next Bitcoin halving scheduled for May 9, 2024, it is worth noting that the digital asset’s price has shown a pattern of peaking between 368 and 550 days after the event and then bottoming out between 779 and 914 days later. This cyclical behavior is an important trend to monitor since it stands to play a major role in driving investor sentiment. 

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Furthermore, China’s initiative to internationalize the renminbi represents a significant shift in global financial dynamics, potentially affecting both traditional and digital currencies. Concurrently, the cryptocurrency market is showcasing its diversity, as evident from altcoins like Ether (ETH) and Solana’s SOL (SOL) reaching 19-month highs, even as Bitcoin’s rally shows signs of pausing.

Lastly, in a much broader context, Brazil’s growing consideration of digital currencies for financial transactions within the G20 reflects an increasing global interest in the potential of digital currencies.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.