- The cryptocurrency industry has seen soaring highs since the turn of 2021.
- The bull market has resulted in a crypto market capitalization of $1.75 trillion and an average daily trading volume of over $100 billion.
- Several analysts believe that we are still in the early days of the bull run and expect Bitcoin to reach as high as $100k.
- Retail and institutional FOMO, Bitcoin halving and lack of trust in the existing financial system are just some of the reasons for the latest crypto craze.
Cryptocurrencies are mainstream now, dominating financial conversations around the world as more people get in on the action.
The Bullish Crypto Market
As 2021 rolled in, interest in cryptocurrencies reached a fever pitch with Bitcoin, Ethereum and Dogecoin hitting their all-time highs of $61,683, $2,036.29 and $0.08495, respectively.
The total cryptocurrency market capitalisation sat at $1.75 trillion in mid-March, up a shocking 20% from last year.
Several reasons account for the blistering growth of cryptocurrencies, including the rush from institutional and retail investors, a lack of trust in the financial system, weakening fiat currencies and the privacy and decentralization that cryptos offer.
When Will The Bull Market End?
According to the most widely accepted definition, a bull market occurs when asset prices rise by 20% after two downswings of 20%. Recent happenings in the cryptocurrency industry point to the irrefutable fact that the market is firmly bullish.
Several coins are up by over 20% since the start of 2021, bringing total market capitalization to $1.75 trillion and an average daily trading volume of over $100 billion.
However, a bull market cannot exist in perpetuity. The oscillating patterns are part and parcel of the general conditions of the markets. The last major bearish (down) market occurred in 2018 and saw Bitcoin tumble to lows of around $3,000.
Cory Klippsten, chief executive of Bitcoin-buying app Swan Bitcoin, commented on how long Bitcoin can enjoy its latest run:
With the caveats that past performance is not an indication of future results and that Bitcoin price could come down as far as it goes up, in my view a realistic peak price between now and the end of 2021 is in the $150,000-$300,000 range,
Dr. Chris Kacher opines that based on stock-to-flow (S2F) models and other metrics, the current bull market should run through to at least late 2021 before the bubble, once again, blows apart, black swans notwithstanding.
On the Flipside
- Bitcoin’s relative strength index (RSI) warns of a dwindling bull run as prices reach new highs.
- The coin’s 14-week RSI has formed a lower high this year, decoupling from the continued uptrend in prices for Bitcoin.
- The last times we’ve seen this pattern (2014 and 2017), Bitcoin fell sharply.
Reasons for the Recent Bull Run
Reasons for the spike in market prices of Bitcoin can be attributed to certain factors such as the rush of institutional investors like Tesla (NASDAQ:TSLA), PayPal, Grayscale, BNY Mellon (NYSE:BK), Square and Microstrategy (NASDAQ:MSTR), who put mig money into cryptocurrencies.
With demand rocketing past supply, prices seem set to follow as investors maintain interest.
The growth of cryptos is also no doubt linked to their appeal to millions around the world, offering privacy, speed, low transaction costs and decentralized networks that traditional financial offerings and fiat currencies could never dream to achieve.
