As a seasoned crypto investor who rode the rollercoaster of 2021’s bull market, I can confidently say that the crypto market has been a wild ride, to put it mildly. The gains we saw were unprecedented, and for a moment there, it seemed like everyone was cashing in on digital gold. However, as Miles Deutscher rightly pointed out, all good things must come to an end, and the crash of 2022 left many of us with burnt fingers and a skeptical eye towards the market.
From March 2020 to November 2021, the digital currency market saw a tremendous surge, as both Bitcoin and other cryptocurrencies reached unmatched peaks in value.
Over the past while, Bitcoin skyrocketed by more than 2,600%, with digital currencies such as Solana (SOL), Fantom (FTM), Avalanche (AVAX), and Terra (LUNA) experiencing multiples of 500 times or greater in value.
As per a recent post by well-known cryptocurrency expert Miles Deutscher on platform X, this current bull market can be attributed to a powerful mix of elements, such as robust monetary policies, stay-at-home orders that kept individuals indoors, and broad dissemination of financial aid checks.
German’s observation was that, just like any other financial bubble, the good times eventually ended. The market peaked in November 2021, and the fall of Terra’s UST and LUNA in May 2022 initiated a prolonged and distressing downward trend.
As a crypto investor, I’ve witnessed how this market downturn, combined with the collapse of companies such as 3AC, Celsius, BlockFi, Voyager, and the notorious FTX, has significantly shaken my faith in the industry. It’s a challenging time for us all.
During the peak of the stock market surge (the bull run), many new investors jumped in, only to suffer financial losses when the market eventually fell. As a result, some decided to exit the market altogether. Meanwhile, those who chose not to invest became increasingly cautious about the reliability of the investment industry.
After the recent events, there’s renewed discussion about whether the crypto market could see another bull run like in 2021, and Miles Deutscher has shared his thoughts on this topic.
Will 2021’s Crypto Frenzy Repeat?
On August 28th’s comprehensive post on X, Deutscher hinted at potential indicators suggesting the market could be preparing for a comeback, even amidst substantial losses and a large number of retail investors leaving the scene.
In simple terms, when BlackRock, the world’s biggest asset manager, approves a Bitcoin spot ETF in January 2024, it could be a significant turning point or a major event that alters the landscape of Bitcoin trading.
As a crypto investor, I can’t help but feel energized by the recent market approval, which has signaled a surge in institutional interest in Bitcoin. This endorsement ignited a rally that propelled Bitcoin to unprecedented heights, reaching an all-time high of $73,000.
However, despite Bitcoin’s strong performance, Deutscher highlighted that altcoins have not followed suit as they did during the 2021 bull run.
It was found by the expert that multiple aspects play a role in this discrepancy, one of which is the trend where a significant portion of newly available funds is being invested in Bitcoin ETFs instead of the wider cryptocurrency market as a whole.
Moreover, the multitude of recently launched cryptocurrency projects has resulted in a scattering of liquidity, which makes it challenging for specific coins to surge in value. Furthermore, the emotional effect of the 2022 market plunge plays an essential role.
Due to being burnt in 2022, many individual investors have become cautious about returning to the market, resulting in a shortage of new funds being invested, as explained by Deutscher.
Most of the existing market participants are seasoned veterans. Altcoins are viewed as vaporware, people are mistrusting of even well-intentioned project founders (who can blame them). This makes trading extremely PvP, and much more difficult. There isn’t an endless flow of fresh capital to underpin the market, like there was in 2021. We’re all essentially fighting over the same dollars.
What Could Bring Retail Back?
As per Deutscher’s analysis, for retail investors to re-enter the Bitcoin market, certain prerequisites must be fulfilled. Initially, if Bitcoin surpasses its previous record highs, it might stimulate renewed curiosity in the market, as has been observed in past trends. This could, in turn, foster optimism and potentially trigger a shift towards alternative cryptocurrencies (altcoins).
1. Furthermore, due to the speculative aspect of the cryptocurrency market, it’s possible that individual investors will re-enter if they observe substantial profits being realized. In the long run, however, for the market to maintain steady growth, practical applications for cryptocurrencies must become prevalent.
Regardless of the ongoing difficulties, the foundation underpinning the cryptocurrency market has seen substantial enhancements compared to last year (2021), as pointed out by Deutscher. He further noted:
I’m optimistic that this could lead to the development of some fantastic decentralized applications (dApps). A few successful ones might be enough to drive widespread cryptocurrency adoption.
In summary, the analyst suggested that while the upcoming market surge might differ from 2021, it still holds promise for substantial profits if favorable circumstances align.
Featured image created with DALL-E, Chart from TradingView
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2024-08-30 02:12