Bitcoin: We recommend being bored
Is it just another boring Bitcoin halving cycle? Yes, and we can prove it
Financial markets, especially in recent decades, and even more in cryptocurrency markets, largely function around human psychology and take us for a volatile trips. The “correction” over the last two weeks took many from euphoria to despair. But most tokens are 2–3 times higher than they were 18 months ago and most major tokens (and of course Bitcoin) remain more than one hundred percent higher than November 2023’s lows. Most importantly, this is only the first leg of the usual 4 year Bitcoin cycle
Normal cycle activity
Our take is not very original but it’s probably correct. ‘The Bitcoin ETF run up’ was in tune with the previous 2 halving cycles. There’s no reason not to expect a continued strong uptrend down the line in 2024 or early 2025.
Recent moves in Bitcoin show in our opinion a strong similarity with the 2016–2020 halving cycle, where Bitcoin ran up from around $3,000 to $15,000 in the summer of 2019, correcting and crossing that threshold only 18 months later, in the final leg of the 2019–2021 bull run.
Two fundamental trends are gaining an undeniable foothold
The first is the continued build out and liquidity of institutional infrastructure for Bitcoin trading.
BTC options and futures at the century old CME today total $10 billion in OI. US ETFs have an additional $11.2 billion in holdings. Deribit options trading is also breaking records. In other words, the ground for mainstream investment in Bitcoin is — at last — ready.
On the tech side, distributed on-chain exchanges, the leading use case for non-Bitcoin cryptocurrency, is booming.
DEXs have regained their uptrend against CeFi spot exchanges with a much higher money velocity. DEX volumes rival 2021 with much less TVL (for now).
This trend is a direct result of the advantages of crypto’s open source finance:
-No hurdles: Permissionless DEXs don’t vet assets or customers, so the asset and customer base are almost limitless.
-Immediacy: Listing of assets and signing up is almost immediate.
Compared to regulated exchanges, there’s no wonder that DEX popularity is growing, which continues to solidify the success of cryptocurrency.
