Is Bitcoin’s four-year bull-bear market cycle over?

Author: Daniel Polotsky, Founder of CoinFlip Source: coindesk Translation: Shan Ouba, Golden Finance

The Bitcoin halving is approaching, and there is no doubt that we seem to be on the verge of major changes. While everyone is staring at the surge in Bitcoin (BTC) prices and the possibility of setting new record highs, the ripple effects are far-reaching. They will touch every corner of the cryptocurrency market and may even mark the end of the four-year bull/bear cycle of cryptocurrency.

However, this is not just about numbers; it is about the potential for a huge shift in the way we perceive and interact with digital currencies. Get ready - this may be the beginning of a brand new era in cryptocurrency.

The Rise of Bitcoin

The value of Bitcoin has surged in recent times, fueled by the upcoming halving event in April and the positive news of the U.S. approval of spot Bitcoin exchange-traded funds (ETFs) and major financial institutions such as BlackRock publicly entering the space. Institutional investor interest has led to unprecedented demand, with Bitcoin hitting a new all-time high of over $73,000 on March 13. This was likely driven by record inflows into ETFs, including $1.045 billion on March 12.

This shift signals a wider acceptance of cryptocurrencies as a legitimate asset class, marking the beginning of a new phase of institutional investment. It also further enhances Bitcoin's credibility and accessibility to retail investors.

These milestones allow investors to gain exposure to Bitcoin without the complexity that comes with direct ownership. Increased liquidity and stability could continue to attract a wider range of investors, driving more widespread mainstream adoption and further fueling the current surge in Bitcoin valuations.

Of course, there are still bears in the market. However, with Bitcoin price predictions ranging from $150,000 to $250,000, the Bitcoin market is about to see a significant influx of institutional capital. This would signal a potential shift in its historical cycle dynamics, driving new levels of growth and innovation across multiple digital asset sectors.

Everything is unpredictable, and there are always pros and cons

While the cryptocurrency market is showing clear upward momentum, several factors could disrupt this trajectory. Continued inflation could prompt the implementation of tighter monetary policies, affecting riskier assets like cryptocurrencies. Slow economic growth could also undermine investor confidence and shift their focus away from speculative investments.

Another short-term issue lies in the Bitcoin mining industry. The upcoming 2024 halving event is expected to trigger major consolidation and defaults as cash-strapped miners struggle to cope with shrinking profit margins and high operating costs. This could force them to sell Bitcoin as they enter bankruptcy proceedings, thus curbing price gains. Additionally, regulatory scrutiny and a lack of funding pose challenges that could exert downward pressure on prices.

The uncertainty surrounding the 2024 elections adds another layer of unpredictability.The political outcome could lead to a variety of regulatory changes, and there is also a potential shift in the U.S. government’s stance on cryptocurrencies. While a Republican administration could provide a more favorable regulatory environment, Democrats could also become more welcoming to the industry due to their alignment with values ​​such as financial inclusion and environmental sustainability. This could foster bipartisan support for cryptocurrency regulation.

Is the cryptocurrency boom/bust cycle over?

However, the unexpected secondary effects of the halving event are perhaps the most tantalizing. While halving has historically been a driver of bullish cycles, the impact of halving may be overshadowed by the other factors mentioned above, such as the astonishing net ETF inflows. Total net ETF inflows have exceeded $15 billion.

Strategic intervention by institutional and retail ETF investors, guided by financial advisors who are more experienced in "buying the dip", may become an effective factor in dampening the halving's ability to drive the market forward.

This means that cryptocurrencies’ typical four-year bull/bear cycle may be coming to an end, seemingly no longer tied to the Bitcoin halving event, but moving toward a relatively stable upward growth trajectory, with ETF inflows becoming the main catalyst for cryptocurrency adoption. Notably, this is the first time that Bitcoin prices have surged before a halving, while previous years of Bitcoin price surges have occurred after the halving.

This shift could have far-reaching consequences for the entire industry. Initially, the ethos of cryptocurrency was rooted in a countercultural resistance to centralized currencies and institutions, with the slogan “without your keys, not your coins.” Now it seems that the dominant power of cryptocurrency may soon be controlled by a few institutions, with ownership dispersed among individuals who cannot access their own keys—a departure from the original decentralized ideal.

This shift toward institutional ownership could lead to a larger event: sovereign states holding Bitcoin. More countries may follow El Salvador’s lead and start a race to accumulate cryptocurrency, which could trigger a global mainstream adoption supercycle.

This change could also result in a departure from the intense boom-bust cycles that the cryptocurrency market has traditionally seen, creating a more stable environment for growth and development within the industry.

While fewer retail investors will experience the euphoria of a bull market, the good news is that they will also avoid the harsh reality of buying at the top and suffering huge losses when the market plummets.

This new stability could give cryptocurrency companies and projects the opportunity to focus on sustainable long-term development, rather than anticipating market cycles and facing extreme downside during crypto winters.

As investors and enthusiasts brace for the intense volatility that is to come, it is clear that the market is on the brink of unprecedented growth and a potential fundamental paradigm shift. While this is both gratifying and a little sad, the upcoming period can be seen as cryptocurrency emerging from its infancy, marking a major evolution in its history. Before saying goodbye, we should all be ready to celebrate its "last hurrah."