Coin Circle to Dark MomentAs is well known, 2022 is a highly challenging year for the cryptocurrency market. The prices of mainstream digital assets such as Bitcoin and Ethereum have experienced a drop of over 70%, reminiscent of a devastating disaster

Coin Circle to Dark Moment

As is well known, 2022 is a highly challenging year for the cryptocurrency market. The prices of mainstream digital assets such as Bitcoin and Ethereum have experienced a drop of over 70%, reminiscent of a devastating disaster. During this period, many mainstream exchanges, asset management institutions, public chains, and lending platforms went bankrupt or exploded, and market liquidity further decreased. Even in 2023, although the market began to stabilize and rebound slightly, it was far from reaching the expected level. This market environment makes people lose confidence, like the darkness before dawn, and the prospects seem exceptionally bleak.

However, true bull markets often come after prolonged periods of downturn, decline, and volatility. This is a universal law in the financial market that applies not only to traditional financial markets, but also to cryptocurrency markets. Although this process may be long and full of hardships, we cannot forget that dawn is approaching and sunrise will eventually arrive as scheduled.

Firstly, the halving of Bitcoin in 2024 will be the beginning of the next major bull market. This historic moment is like a climax in a drama, leading us into a new market stage.

Secondly, a bull market is often accompanied by a significant decline. This decline is often influenced by factors such as debt crises and corporate bankruptcies in traditional financial markets. However, this is only the calm before the storm, and after the storm, a beautiful tomorrow will come.

Once again, after the crisis, a bull market will truly come. Only after experiencing the downturn and volatility of the market can we look forward to and welcome the arrival of the next bull market.

Finally, the next round of Bitcoin is expected to reach a high of approximately $120000. This is not a speculation out of thin air, but a reasonable speculation based on market patterns and historical data. Therefore, let us maintain confidence, because the darkness before dawn will always dissipate and new opportunities will emerge.

Bitcoin halved

The history of Bitcoin indicates that every halving event has become a key factor driving Bitcoin into a new bull market. In the past three halvings, Bitcoin prices have all experienced significant increases, as shown in the table below:

Now, the halving event in 2024 is approaching, and many project parties are preparing to stand out in this new halving cycle, welcoming more traffic and capital inflows. With the joint efforts of all parties, history will repeat itself and a new round of bull market is about to begin.

2023 market forecast and 2024-2025 bull market forecast

Faced with the "halving market" in 2024 and the highly complex macro environment, the crypto asset market is facing both opportunities and challenges. Our past experience has taught us that monetary policy and liquidity are the main factors affecting the crypto asset market, while industry fundamentals determine the height and duration of market conditions. Considering the current macro environment and industry development situation, if the historical price trends of Bitcoin are combined into one concept, it will present the following characteristics:

(1) 2023 Market Forecast:

ETF2023Bitcoin halved

(2) 2024-2025 Bull Market Exercise:

Although the macroeconomic environment in 2023 is not as good as in 2019, with the easing of inflation and the improvement of various economic indicators, we can expect an improvement in the macroeconomic interest rate environment from 2024 to 2025 (i.e. slowing down interest rate hikes, stopping and initiating interest rate cuts). When the Federal Reserve adjusts its monetary policy, especially by adopting interest rate cutting strategies, it usually attracts more funds to enter the market. In addition, as the total market value of Bitcoin gradually increases, its price increase seems to be gradually decreasing. After halving the first three times of Bitcoin, each increase gradually decreased. Considering that large professional investment institutions are beginning to enter the Bitcoin market, they not only invest in Bitcoin, but may also drive the emergence of more cryptocurrency derivatives, which are usually designed for institutional investors to engage in arbitrage trading. This may suppress the price volatility of Bitcoin.

Taking into account these factors, we can expect that the halving of Bitcoin's market will still occur as planned, but the increase will be lower than the previous three halving. We can predict that the increase may be in the range of 2 to 3 times. As for the time frame, the industry estimates that the most pessimistic scenario is that interest rate cuts will start at the end of next year, while the optimistic scenario is in the second quarter of next year. From the start of interest rate cuts to the peak of money supply M2, the bull market cycle may be postponed. This time may not be as rapid as the bull market in the fourth quarter of 2020, and currently, the most likely scenario is in 2025.

The degree of liquidity recovery and the influence of emerging narratives within the industry will be important factors affecting the growth rate. In the industry, it is expected that the approval and listing of ETFs (exchange traded funds) will bring a large amount of funds into the market. However, compared to the prosperous bull market environment brought about by loose liquidity and the vigorous development of DeFi (decentralized finance) from 2020 to 2021, the market environment from 2024 to 2025 is currently not ideal. Therefore, we can speculate that the likelihood of a significant increase is relatively low.

(3) Risk factors

The bullish market needs to be more favorable than expected, mainly reflected in abundant capital inflows, unexpected interest rate cuts, loose regulatory approvals, and major industry innovations, all of which will contribute to the super bullish market. But on the other hand, the Black Swan event is often unpredictable, and no one can predict the COVID-19 pandemic that will sweep the world in 2020. Moreover, the global flood rescue is basically accompanied by the financial crisis or the Great Recession. The volatility of risk assets is usually increased, and risks and opportunities coexist - the darkness before the dawn is often the hardest stage.

New Narrative - The Trigger Point of the Bull Market

When everything is ready, only the east wind owes.

(1) Interest rate reduction:

Currently, the inflation rate in the United States remains stable at around 3%, while the official inflation target of the Federal Reserve is 2%. Federal Reserve Chairman Powell and other officials have repeatedly stated that it is unlikely to change the inflation target, so whether future interest rate cuts will largely depend on when the inflation rate can fall below 2%.

Even if the Federal Reserve decides to cut interest rates, the rate reduction cycle usually takes 2 to 3 years to complete. Throughout the entire interest rate reduction cycle, the price of cryptocurrencies may experience a gradual upward trend. Based on current data, it is expected that the Federal Reserve may begin cutting interest rates in the autumn and winter of 2024.

(2) US presidential campaign:

The end of 2024 is about to usher in the US presidential election, and different presidents' economic policies may have different impacts on the cryptocurrency market. During Trump's presidency, he adopted a series of expansionary fiscal policies, including significant cuts in corporate income tax and financial tax reforms to stimulate economic growth. In addition, Trump has repeatedly publicly criticized Federal Reserve Chairman Powell, urging him to lower interest rates and adopt quantitative easing policies to boost the market.

In contrast, the Biden administration's economic policies are more conservative, although there are also some infrastructure and sectoral support plans, overall they tend to be more conservative. If Trump is re elected, it may accelerate the bull market in the cryptocurrency market. Although Trump has repeatedly criticized the cryptocurrency industry, recently disclosed financial reports show that he holds over $2.8 million in Ethereum in a wallet and has earned a profit of $4.9 million from an NFT authorization agreement.

(3) More mature cryptocurrency regulatory system:

In the first half of 2023, cryptocurrency regulatory policies began to be gradually established in regions such as the United States, Europe, Hong Kong, Singapore, Japan, and South Korea. The introduction of these policies means stricter regulation, a more mature legal framework, and a more transparent trading environment. These changes are expected to help cryptocurrencies gradually break free from negative labels such as insecurity and accusations of money laundering tools, thereby increasing the confidence of large financial institutions in cryptocurrencies and attracting more funds to enter the market. It is expected that 2024 will still be a year of rapid development for the regulatory system, and by 2025, the regulatory framework is expected to be further improved.

(4) More diversified cryptocurrency projects:

In the next cryptocurrency bull market, we can foresee a more diversified trend. This diversification will manifest in aspects such as tokens, ecosystems, and financial products.

Firstly, the diversification of tokens will include emerging AI tokens and tokens launched by large companies, such as PYUSD. This means that not only will traditional tokens such as Bitcoin and Ethereum continue to exist, but more different types of tokens will also emerge.

Secondly, the diversification of ecosystems will include the emergence of emerging ecosystems such as decentralized e-commerce based on Web3 and decentralized data storage. This will bring more possibilities and opportunities to the encrypted world.

Finally, the diversification of financial products will include innovative products such as upcoming ETF funds. This will help expand the participation of cryptocurrency market participants and provide more investment options.

Bitcoin has gone through multiple bull bear cycles, with a market value exceeding $1 trillion for the first time in 2021, marking that cryptocurrency has become one of the mainstream alternative assets worldwide. However, in the new bull market, Bitcoin's growth may be limited to some extent, as its market value is already very large. We expect Bitcoin to reach its peak and then stabilize. In the future, the cryptocurrency market will become more diversified, with different types of assets and ecosystems thriving, but the possibility of an epic bull market will gradually decrease.

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