The current Bitcoin bull run demonstrates unique characteristics that set it apart from previous cycles.
While the inherent volatility of crypto markets remains, a blend of regulatory shifts, technological advancements, and macroeconomic factors suggests the industry is entering a period with the potential to reshape the future of digital assets.
At the core of this transformation is the anticipated impact of the Bitcoin halving. Historically, the halving has been a precursor to significant price appreciation for Bitcoin, which catalyzes broader market rallies. This phenomenon, tied to the reduction in new Bitcoin supply, has previously ignited periods of intense speculation and investment.
However, the current cycle is diverging in key ways. Unlike past bull runs, the fluctuations in Bitcoin’s price are becoming less extreme. This is indicative of a maturation of the market and potentially signals more stable growth ahead.
Despite the subdued price appreciation, the CEO of Factor LLC, Peter Brandt, and Managing Partner at Fundstrat, Tom Lee, believe Bitcoin could still surpass $150,000. For this reason, Matthew Howells-Barby, VP of Growth at Kraken, believes the new pricing trend actually bolsters Bitcoin’s value proposition.
“While there’s a reduction in overall volatility, Bitcoin is still in the category of risk assets and investors of all sizes will view this as a potentially high-return investment. The more cycles that Bitcoin survives and goes on to outperform, the more confidence this breeds in longer-term investors,” Howells-Barby told BeInCrypto.
This trend, coupled with the success of spot Bitcoin exchange-traded funds (ETFs), exemplifies the growing investor confidence and institutional acceptance of cryptocurrencies as a legitimate asset class. Indeed, spot Bitcoin ETFs have attracted over $7.4 billion in net inflows within the first 7 weeks of trading. Notable products such as Blackrock’s IBIT ETF quickly climbed the ranks of top ETFs by inflow.
Together, the recently launched spot Bitcoin spot ETFs have over $50 billion in assets under management, according to the co-founder of Reflexivity Research, Will Clemente. Consequently, renowned industry figures like Layah Heilpern believe that spot Bitcoin ETFs have changed the market structure, and “no one knows what is coming next.”
What is certain is that this surge of institutional interest, long anticipated by market observers, has finally materialized. According to Howells-Barby, this development lays a solid foundation for the ongoing Bitcoin bull run. It has the potential to gain even more momentum with the entry of new participants into the market.
“What’s even more encouraging is that many RIA networks and major brokers are still yet to list spot Bitcoin ETFs. This is coming and will create another wave of buying from pent-up demand,” Howells-Barby added.
Moreover, the crypto market benefits from a significantly more positive macroeconomic outlook. Analysts believe inflation rates have peaked and anticipate lower interest rates, likely leading to increased liquidity.
Jerome Powell, the Chairman of the US Federal Reserve, recently informed lawmakers that he and his colleagues are committed to such a goal. He also reiterated that interest rate reductions will still be possible in the upcoming months.
“[Rate cuts] really will depend on the path of the economy. Our focus is on maximum employment and price stability, and the incoming data as they affect the outlook, and those are the things we’ll be looking at. We are just going to keep our heads down and do our jobs and try to deliver what the public is expecting from us,” Powell said.
Howells-Barby believes that the improving economic environment is conducive to further investments in digital assets. He maintains that retail and institutional investors seek higher returns in a low-interest-rate environment.
“It’s easy to forget that much of the recent price action in both crypto and equities has happened before any fiscal easing. As rates come down, more liquidity will enter the markets and this should only be positive for assets like Bitcoin,” Howells-Barby emphasized.
Technological innovations within the crypto ecosystem also play a crucial role in this unique bull run. The Ethereum network’s upcoming Dencun upgrade promises to reduce costs and increase efficiency for Layer 2 rollups. It focuses on scalability through proto-danksharding, bringing forward the concept of blob-carrying transactions.
This innovative method significantly reduces data storage requirements at the consensus layer. It offloads data storage and uses hashes for reference, streamlining the transaction verification process. Ultimately, this drastically reduces the data storage burden since blobs are temporary and expire after roughly three weeks.
These advancements are significant, especially for Ethereum’s Layer 2 (L2) solutions. The Ethereum upgrade promises to reduce transaction fees by at least a factor of 10, heralding a major leap forward in the network’s scalability and cost-efficiency.
“The long-awaited upgrade is forecast to cut costs for Ethereum’s L2s by at least 10x, making Ethereum more scalable and efficient. By leveraging rollups and temporary blob storage, the developers aim to increase throughput and reduce fees for users,” Head of Research at IntoTheBlock, Lucas Outumuro, explained.
The Dencun upgrade, along with advancements in parallelization and modularization by protocols like Sei and Celestia, is expected to drive a new wave of interest and investment in crypto.
“The recent interest in modular scalability, led by the likes of Celestia, Avail, EigenLayer, and many more, has presented a new slew of options for driving down end-user costs and creating fertile ground for developers to build in. The upcoming Dencun upgrade is another milestone in the journey towards proto-danksharding, but there’s still a long way to go,” Howells-Barby stated.
Furthermore, the crypto industry is witnessing unprecedented regulatory clarity and engagement. Efforts to establish frameworks like the Markets in Crypto-Assets (MiCA) in the European Union signal a move towards a more regulated and secure environment.
Such regulatory advancements provide a layer of certainty and trust that was previously lacking. Therefore, it paves the way for broader adoption and integration of cryptocurrencies into the global financial system.
The current crypto bull run is characterized by reducing volatility, institutional adoption, technological advancements, and a favorable macroeconomic backdrop. These factors, together with increasing regulatory clarity, suggest a pivotal moment that could define the future trajectory of digital assets.
“Several sovereign states have begun accumulating crypto assets and integrating them into their financial systems. As clearer regulatory frameworks arrive around the world, this will only increase. There’s also the fact that 130 countries around the world – representing 98% of global GDP – are exploring the development of a central bank digital currency (CBDC). All of this is happening while traditional financial institutions are trying to chase the flood of capital coming in via the Bitcoin spot ETFs,” Howells-Barby concluded.
The unique confluence of these elements reflects the distinct nature of this Bitcoin bull run, indicating it may be unlike any other seen before.