I just dug into all the data and found something shocking. Here’s when and why Bitcoin and altcoins will break out.
Before we get started, could you please do me a favor?
I spent a lot of time writing this article and sincerely hope to get your support and interaction!
Despite the current bearish market sentiment, I thought it was necessary to share this analysis because emotions are running high and many people are falling into the trap of thinking that everything is over. Here is the exact reason why I prepared that we are still in a bull market.
Analysis of Bitcoin after halving
Many analysts believe that the consolidation after Bitcoin's halving is normal and requires patience. Although Bitcoin has tripled since September, it is still worth watching how the market moves in the coming months. We are currently experiencing 15 weeks of consolidation and a 13% drop from the highs. This volatility is to be expected after almost doubling since January.
While such phases can be frustrating and tedious, they are part of the natural process. As you can see, volatility is low, and there are several reasons for this:
- Summer is a period of stagnation
- Uncertainty before ETH ETF
- Lack of clear narrative
But it’s during these difficult times that staying optimistic is often the most rewarding, and here’s why.
The current cycle is very similar to the 2017 and 2021 bull runs
We are now in the accumulation phase:
- Lasted about 4 months in 2016
- Lasts about 5 months in 2020
Once the accumulation phase is broken, a parabolic rise usually follows. Locally, you might think the cycle is over, bombarded by all kinds of bearish news:
- Germany sells $3 billion in Bitcoin
- Bitcoin ETF sees $900 million outflow
- CFTC Investigation into Jump Trading
This fear and uncertainty is always created to make you doubt your investments.
Federal Reserve Balance Sheet
The chart is beginning to bottom out after nearly two years of decline. When the Fed injects liquidity, it buys assets and adds them to its balance sheet, and vice versa.
- Balance sheet growth: Fed purchases assets, increases liquidity
- Balance sheet decline: Fed sells assets, reduces liquidity
Keep an eye on these trends. When the Fed starts buying assets, it will inject more liquidity into traditional financial markets. Since cryptocurrency is closely correlated with traditional markets, it will also benefit from this increased liquidity.
Stablecoin Index
It shows the new capital entering the crypto market. Currently, we are far from the liquidity level of the previous cycle. More liquidity means more opportunities and greater risk appetite.
Venture capital project funding
In the last bull run, the most money historically was at the peak of the cycle in 2021 (about $13 billion per quarter). Current investment is 3-4 times lower than that. Even if Bitcoin reaches a new all-time high, the market is not hot enough to reach the peak. When it does, we will see new funding highs.
Global Net Liquidity Index
This indicator brings together the assets of major central banks and the Federal Reserve reserves. Currently, global liquidity is in a consolidation phase, but the situation is about to change. Countries like Canada and Switzerland have already cut interest rates. The trend is clear and the United States will soon follow suit.
- Interest rate cut => Money issuance => More money injected into traditional financial markets => More money flows into risky assets (cryptocurrencies)
US 2024 election
Cryptocurrency is now a big part of politics, especially in the Trump vs Biden race. Trump even said he would end Biden’s war on cryptocurrencies. Such strong support from the US government would be a huge boost to the entire market.
The timing of the altcoin explosion
If you are an altcoin holder: don’t sell now, this could be the biggest mistake you can make in this cycle. Here are the key factors that could drive altcoins higher soon, and what altcoin season we will see:
- Bitcoin Dominance: It represents the percentage of Bitcoin's market capitalization to the total crypto market capitalization. Since April, this dominance has formed a range between 53.9% and 57%. Once the dominance starts to decline and falls below this range, it will be an excellent signal of the upcoming altcoin season.
- Ethereum ETF Approval Imminent: While the exact date remains unknown, rumors suggest we could see approval as early as July. This milestone could clarify trends in altcoins and pave the way for more ETFs.
- Solana ETF will be next: 3iQ Corporation has applied to launch a spot Solana-ETF in Canada, under the ticker QSOL. The company has about $1 billion in assets. Canada already had spot ETFs for Bitcoin and Ethereum before the U.S. had futures ETFs.
- Other Crypto Markets: OTHERS represents the entire crypto market minus the top 10, a true reflection of altcoins. We are now in the same position as in the summer of 2023, are you bullish enough? A similar situation happened in the last cycle. During the COVID crash, we saw Bitcoin fall 63% while many altcoins fell 80%. This pain point became the best entry point for most coins.
Key Takeaways
Don’t waver during low volatility. Remember the bullish drivers:
- SEC crypto chief resigns
- Ethereum ETF launched
- Trump's support for cryptocurrencies
- Interest rate cuts
in conclusion
Despite many uncertainties, altcoins may surprise the market in the second half of 2024. Although many believe that the bull run is over, I believe HODL is the best strategy right now.
