For the first time since June, the price of bitcoin momentarily fell below $100,000. Additionally, many analysts are questioning whether the current cryptocurrency bull market is over because of the dynamics typically at work in bitcoin’s four-year market cycles around halving events, where the amount of new bitcoin issued in each block is cut in half.
Some, on the other hand, assert that “this time is different” and anticipate seeing new all-time highs exceeding $125,000 in the upcoming year. Due to recent developments, Alex Thorn, Head of Firmwide Research at Galaxy, has lowered his projections for the price of bitcoin at year’s end from $185,000 to $120,000. He is not the only expert making such a change. In contrast to its previous history of dramatic price swings, his current report suggests that there will likely be more moderate market cycles and less volatility for bitcoin in the future.
While it is always risky to be the person who claims things will be different this time, the shifting supply and demand dynamics surrounding the bitcoin asset as a result of the massive infusion of capital from traditional financial institutions reinforces the possibility that the impact of halving events on price may be dwindling.
Why, For Now, This Could Be the End
In previous cycles of the cryptocurrency market, there has been a tendency for things to get quite overheated in terms of retail exuberance, which ultimately resulted in some catastrophic incident that caused intense dread in the market. For instance, the enormous cryptocurrency bull market of 2021 ultimately resulted in overleveraging and blatant fraud, which led to the downfall and subsequent bankruptcy of cryptocurrency exchange FTX. The peak of the market was reached four years prior when the initial coin offerings (ICOs) bubble burst.
The greatest liquidation event in the history of the cryptocurrency market occurred a few weeks ago, at least nominally. Furthermore, the consequences of that incident, which resulted in the loss of almost $20 billion in positions, are probably still not entirely clear.
Furthermore, Sequans, a bitcoin treasury business, recently sold a portion of its bitcoin stack in order to finance stock price support buybacks. A corporation that uses debt to swiftly amass as much bitcoin as possible is known as a bitcoin treasury company. According to CoinDesk, Sequans could be the first example of a treasury firm that is only focused on selling bitcoin, even if other digital asset treasury companies have previously marketed non-bitcoin crypto assets.
Although Strategy created the idea of a bitcoin treasury company during the previous cryptocurrency market cycle, some analysts have expressed concern about the sustainability of the numerous imitation businesses that have emerged in the last year or two and are likewise using debt to take leveraged positions on bitcoin and other cryptocurrency assets.
These kind of occurrences, together with the date nearly matching when the current cycle is predicted to end—based on the four-year schedule of past cycles—have lots of experts rightfully concerned.
Why Would Things Be Different This Time?
Institutions have added a whole new level of liquidity to the bitcoin market, and the impact of halving events on supply gradually fades, which are two key reasons why some analysts think this time might be different and the four-year cycle may no longer be relevant. “The movement of assets into ETFs is a 5-10 year trend,” Bitwise CIO Matt Hougan said earlier this year. It began in 2024. More widespread institutional adoption is still in its early stages (ETFs are still being authorized on national account systems, pensions and endowments are just now taking cryptocurrency into consideration, etc.).
The emergence of bitcoin exchange-traded funds (ETFs) and the increasing use of bitcoin as a reserve asset by large corporations and even nation states (though not in the same leveraged way as the previously mentioned bitcoin treasury companies) indicate that the supply and demand dynamics at work here may differ significantly from those observed at lower price levels in earlier cycles.
The overall absence of a so-called “altseason” thus far in this cycle—a time when lesser cryptocurrency assets begin to significantly outperform bitcoin in a market frenzy that typically signals the end of a cryptocurrency bull market—is another thing to take into account. According to Bitbo, the market dominance of Bitcoin is at 73.7%, which is not far from the cycle high of 78.5%.
Additionally, there are indications that many of the more centralized elements of the cryptocurrency economy may eventually be incorporated into the established, conventional financial sector, which might point to a positive shift away from decentralization theater and toward a more developed market.
