Is the Crypto Bull Run Really Over? Here’s What You Need to Know

Unless you’ve been living under a rock, or touching grass and barbecuing delicious meats in the beautiful summer weather, you would have noticed the crypto market has once again found itself at a crossroads following a massive tumble in the past few days. Although this horrendous price action wasn’t contained to just the crypto market, this volatility has prompted many to question whether the current bull run is over, or if we are merely witnessing a temporary correction.

To understand this, we need to look at Bitcoin and consider the broader crypto ecosystem, taking into account historical cycles, market trends, and recent developments across various digital assets.

Historical Patterns and cycles

Crypto, particularly Bitcoin, has historically followed a four-year cycle, largely driven by the halving event, where the reward for mining new blocks is halved approximately every four years. The most recent halving occurred in April 2024, reducing the block reward from 6.25 BTC to 3.125 BTC. Historically, halvings have been followed by significant bull runs, as seen in 2012, 2016, and 2020.

The 2020 halving provides a pertinent example. Before this event, Bitcoin experienced the COVID-19 flash crash in March 2020, where its price plummeted to around $3,800. However, this was followed by a strong recovery and subsequent bull run. From April 2020 to September 2020, Bitcoin’s price steadily increased from around $7,000 to $11,000, setting the stage for a dramatic rise to an all-time high of approximately $69,000 by November 2021.

This pattern of initial correction followed by substantial growth post-halving is a critical consideration when evaluating the current market.

Market Sentiment and Broader factors

The recent post-halving crash saw Bitcoin’s price drop from a peak of $70,000 in June 2024 to below $50,000 by early August. While this sharp decline has raised concerns, it is important to consider the broader economic context. Rising inflation, regulatory pressures, and geopolitical tensions have all contributed to heightened market volatility. These factors have caused a risk-off sentiment among investors, leading to sell-offs in not just crypto, but other high-risk assets as well.

Institutional adoptment and tech advancements

Despite the volatility, institutional adoption of crypto continues to grow. Major financial institutions, corporations, and even governments are increasingly recognizing the value of digital assets. For instance, companies like Tesla and MicroStrategy have large Bitcoin holdings, while countries like El Salvador have adopted Bitcoin as legal tender.

Moreover, advancements in blockchain technology, such as the development of Ethereum 2.0 coupled with the recent launch of its ETFs, only bolster the notion that we’ve only seen the beginning of crypto’s journey into the mainstream consciousness.

“Follow the money”

If historical data and the rise of adoption isn’t enough to convince you, it’s always been a wise move to “follow the money.” By that, keep notes on what large institutions and people who have a history of being correct are doing. It appears that during this period of turmoil, some of the most notable holders of Bitcoin did nothing but sit on their hands:

Furthermore, the broader crypto market is likely to see continued growth driven by innovations in DeFi, NFTs, and blockchain technology. Projects focusing on interoperability, scalability, and privacy are set to enhance the functionality and utility of digital assets, attracting more users and investors.

Final Thoughts

While the latest market crash in mid-2024 has undoubtedly caused concern, it is essential to view it within the context of historical cycles and broader market trends. The market has shown resilience and a capacity for recovery in the past, and already we can see prices recovering, bouncing quite sharply off their lows.

Therefore, it is plausible that the current downturn is a temporary correction within a longer-term bullish trajectory. History has also proven that shakeouts such as these transfer wealth from those who are shaky in their convictions to those who have a longer-term time horizon.

The next few months through to the end of 2024 should give us a clearer picture of what part of the cycle we are in, and indeed, whether the bull was just having a little nap rather than a full-blown hangover.