The new US President Trump has previously promised to establish a strategic reserve of Bitcoin. Wyoming Senator Cynthia Lummis also proposed a Bitcoin Reserve Act earlier this year, requiring the United States to purchase 1 million Bitcoins. At the same time, similar proposals have also appeared in Russia, Thailand, and Germany. A Bitcoin reserve competition may be beginning.
Is a super cycle coming?
Cointelegraph reported that if governments around the world rush to build up Bitcoin reserves, some market participants are optimistic that the "boom-bust cycle" of Bitcoin's halving every four years will be broken and the currency market will enter a "super cycle" of continuous growth.
Alex Krüger, founder and economist of macro digital asset consulting firm Asgard Markets, said that the results of the US election made him believe that "Bitcoin is very likely to enter a super cycle." He believes that the special situation of Bitcoin can be compared to gold. Between 1971 and 1981, gold soared from US$35 per ounce to US$850. This was because then-US President Nixon ended the Bretton Woods system and decoupled the United States from the gold standard.
Alex Krüger did not rule out the possibility that Bitcoin could experience a bear market like in past cycles, but he called on cryptocurrency investors to “stop comparing this cycle to past cycles” because this time may be different.
The Dangers of Supercycle Theory
However, the report also pointed out that during every Bitcoin bull run, there has been a narrative of "this time is different", each time backed by narratives around mainstream and institutional adoption, but ultimately ended with a collapse in the currency price and a long-term bear market.
For example, during the 2013-2014 bull market, the super cycle theory believed that Bitcoin would become an alternative asset to fiat currency and attract international attention; in the 2017-2018 cycle, it hoped for mainstream financial adoption of Bitcoin; in the 2020-2021 cycle, when technology companies such as MicroStrategy, Square and Tesla bought Bitcoin, the super cycle theory believed that many technology companies would follow suit.
However, in each cycle, the super cycle narrative ultimately failed to materialize. Therefore, betting on the super cycle theory can be very dangerous. Chris Brunsike, partner at venture capital firm Placeholder and former head of blockchain products at ARK Invest, described the Bitcoin super cycle as "a collective fantasy."
However, if the US Bitcoin Reserve Act is passed, it may trigger a competition among countries to hoard Bitcoin. Blockcircle CEO Basel Ismail said that the passage of the bill will be "one of the most bullish events in the history of cryptocurrency" because "it will catalyze a wave of competition to buy Bitcoin."
Therefore, veteran cryptocurrency investor Chris Dunn still believes that a super cycle is coming, and he is optimistic that this FOMO-based competitive buying frenzy among countries may completely change the current cryptocurrency market cycle.
