Based on past experience, the price of Bitcoin will rise significantly 3-6 months before the pie is halved. Therefore, the next halving will be in early May 2024, and the market will most likely start a bull market around the first quarter. However, when analyzing market conditions, we cannot ignore the influence of other factors, especially the current influx of traditional funds into the currency circle.
The participation of traditional funds makes the currency circle more affected by the external financial environment. For example, the most recent bear market was largely caused by the Federal Reserve raising interest rates. The global interest rate hike storm is expected to last until the first quarter of 2023, and due to the interest rate hike, the economy will enter a recession that will last until the first half of 2024. It will not be until the second half of 2024 that the economy enters the recovery stage and the interest rate cutting cycle begins.
With the participation of traditional funds, Bitcoin and other cryptocurrencies may be affected by the external financial environment more quickly. This means that the benefits of Bitcoin’s halving may be offset by the negative effects of economic recession and interest rate increases. However, as the recession ends and the rate-cutting cycle begins, the market could rally again.
Taking these factors into consideration, although the Bitcoin halving may bring upward momentum, during this period, we also need to pay attention to changes in the external financial environment to better grasp investment opportunities. While investors are paying attention to the Bitcoin halving, they should also pay close attention to the trends in the global economy and financial markets in order to be prepared before the bull market truly arrives.
At the same time, analysts predict that the U.S. SEC agency may approve a Bitcoin spot ETF after mid-2023. If the spot ETF passes, it will undoubtedly give the entire market a shot in the arm.
Finally, web3, the metaverse, and the digital economy are now in full swing, and will undoubtedly become a breakthrough point in promoting global economic development in the next few decades. Although these do not represent virtual currency, the relationship is very close, and it is also a long-term strong benefit to it.
To sum up, the combination of the halving cycle, the interest rate cut cycle, spot ETFs, and web3 can predict that the next bull market of virtual currencies will most likely not start until the first or second quarter of 2024.
History will not lie, it will only warn you: after every bull market carnival, there will be a bear market that plummets by more than 80%. Since no value is generated, the virtual currency market is essentially a "zero-sum game." Some people make money due to the sudden rise, and some people will definitely lose money due to the sudden drop.
The three bull markets in history were all followed by an abysmal bear market, without exception!
After the first bull market in 2013, Bitcoin fell from US$1,166 to US$170 in 2014, a drop of more than 85%.
After the second bull market in 2017, between 2018 and 2019, Bitcoin plummeted from a maximum of around US$20,000 to around US$3,000, a drop of more than 85%.
After the third bull market in 2021, Bitcoin plummeted from a maximum of $69,000 to around $19,000 today in 2022, a drop of more than 72%.
Each of the above plunges will create many sad stories in the currency circle. Many people's assets have shrunk from millions to hundreds of thousands, and even the millions of assets of many contract players have been reduced to zero.
This crypto bear market has been long and painful, but here are some signs that may indicate when it may end.
Catalysts for the 2022 Bear Market There are several factors that have led to the current bear market.
First, the bear market accumulation begins in 2021. During this time, many regulators have imposed strict legal restrictions on cryptocurrencies, creating fear and uncertainty in the market. The U.S. Securities and Exchange Commission (SEC)’s lawsuit against Ripple is a typical example. In addition, China banned Bitcoin mining, causing most of its BTC miners to relocate to other countries, which also had a profound impact on the market.
Rising global inflation and rising interest rates have put pressure on markets, leading to lower-than-expected crypto investment. While there is a lot of publicity about inflation and interest rates in the United States, other countries such as India are experiencing similar challenges. These factors have reduced investor confidence in cryptocurrencies, further weakening market stability.
The actions of the Federal Reserve are also an important factor in the bear market. Over the past year, the Federal Reserve has announced that it is taking drastic measures to "accelerate the reduction of its monthly bond purchases." In an effort to reduce inflation, the Federal Reserve raised the federal funds rate twice during the year. These measures have reduced the disposable income of U.S. residents, thereby discouraging investment in risky assets such as cryptocurrencies.
Overall, the crypto market will face more challenges and opportunities in the future, and we look forward to this market becoming more mature and stable after experiencing this bear market.
