BTC crashed in 2018 and made a comeback in 2021, but what can we expect from the crypto market in the future? In this article, we will explore a possible prediction for the next move in the crypto markets based on historical patterns, technical analysis, and market sentiment.
Let's start by recapping what happened in the last major crypto bull run in 2017. Bitcoin experienced an unprecedented rise, going from under $1,000 to nearly $20,000 in less than 12 months. Altcoins also saw massive gains, with Ethereum exploding from $8 to $1,400 and XRP surging 35,000%. However, this unsustainable growth led to a crash in 2018, with Bitcoin losing 84% of its value and Ethereum sinking to $85.
The Calm Before the Storm
After the crash, the crypto markets remained relatively calm for the next two years, allowing for real development work to take place and speculative excesses to be washed out. Now, in late 2021, there is a sense that the market is preparing to move again. Bitcoin has climbed back above $60,000 and Ethereum has broken $4,000. Meme coins like DOGE and SHIB have attracted significant retail investment, and NFTs have exploded onto the scene. It seems that the bulls are ready to run once again.
Predicting the Next Move
Based on historical patterns, here is one potential scenario for the next move in the crypto markets:
- A New Mini-Bull Run: We could be in the early stages of a new mini-bull run, where prices climb moderately over the next few months. However, this run is unlikely to reach the frenzied heights of 2017 and will be a slower, more gradual ascent. This may attract retail investors who missed out on the early stages.
- Profit-Taking and Correction: At a certain point, possibly near the old highs around $65,000 for Bitcoin, whales and institutional investors who ignited the latest run may take profits. This could trigger a correction, but not a catastrophic one. The correction could be in the range of 40-60%, which is normal by crypto standards.
- Boring Sideways ACTION: After the correction runs its course, the big players will start accumulating again. This period of consolidation and sideways movement may continue for a few months.
- The Resumption of the Bull Run: Eventually, the bull run will resume in earnest. This time, there will be a real fear of missing out (FOMO) as Bitcoin crosses $100,000 and major altcoins go on parabolic runs. We could see rapid expansion in crypto dominance in 2022-2023.
Market Conditions Needed
Several market conditions could facilitate this sequence of events:
- Break of Downtrend Line: Bitcoin needs to conclusively break the 2018-2020 downtrend line. A retest of this line, which is now around $46,000, could set the stage for a mega-bull run.
- Room for Growth: Overall crypto market dominance is still low compared to stocks and gold, indicating there is room for growth.
- Increasing Adoption: The adoption of cryptocurrencies is steadily increasing, with big banks and financial players getting involved. El Salvador has even made Bitcoin legal tender, and major ETFs may be on the horizon.
- Inflation Hedge: Investors may turn to cryptocurrencies as a hedge against inflation, with stocks becoming frothy after a long bull run.
- Base of Real Value: The long period of stagnation from 2018-2020 allowed a new crop of investors to accumulate at reasonable prices, potentially building the next mania phase on a base of real-world value.
While nothing is guaranteed in the volatile world of crypto, based on past cycles, current adoption trends, and market fundamentals, there is a possibility that we are on the cusp of a new and powerful crypto bull market. However, it's important to note that unforeseen events, such as new regulations or black swan events, could derail this sequence of events. As always, it's crucial to approach the crypto market with caution and conduct thorough research before making any investment decisions.