Bitcoin is up on a year-to-date time frame, banks are failing and the Federal Reserve’s (Fed) monetary tightening mission appears to be coming to an end. Does this mean the bull market is at work again?
Cryptocurrency market analysis firm CryptoQuant was recently interviewed at Consensus 2023 about all aspects of Bitcoin’s price — including its place in the market cycle, its correlation with gold, and its role in the ongoing US banking crisis .
Bitcoin price will rise soon
Asked whether the bull market has returned, CryptoQuant head of strategy and business development Benjamin Brannan commented that Bitcoin appears to be “coming out of the bear market.”
While he personally believes a price correction is “always possible,” the head of business development revealed that he has received signals from institutional clients interested in investing in bitcoin and cryptocurrencies. He passed away in the third quarter of the fourth quarter of 2023.
“I know this primarily from conversations with attribution organizations and those who raise money for core funds. They have discussions with a lot of high net worth organizations or individuals.”
Brannan added that institutions are waiting for confirmation that Bitcoin has exited the bear market in the second half of the year, which so far “seems to be happening.”
bitcoin and gold
Trading around $16,500 at the start of the year, bitcoin quickly surged above $27,000 in response to this year’s U.S. banking crisis. Mounting difficulties have pushed Silicon Valley Bank, Silvergate, First Republic, and others into the abyss.
The event coincided with a bearish correlation between Bitcoin and stocks, while increasing with gold. This phenomenon is especially evident when Bitcoin sees a fresh rally amidst Fed rate hikes. Naturally, events like this last year caused stock and cryptocurrency prices to fall.
source: Clement
Branaan said the “mania for bitcoin” shows that the market is, at least for now, viewing the digital currency as a “safe-haven asset.” In the long run, he predicts it will behave like a mix of stocks and gold.
Meanwhile, Ho Chan Chung, head of marketing at Cryptoquant, predicted Bitcoin is a commodity that does well when the fiat system hits roadblocks. Unlike other cryptocurrencies, U.S. regulators only agree that bitcoin is a commodity, while altcoins can be securities.
4-year market cycle
Bitcoin is known for cyclically moving between bull and bear markets every 4 years, based on a supply release schedule that reduces inflation over the same period. While general patterns can be predicted, it is difficult to pinpoint the exact times when crypto markets hit tops and bottoms.
According to Brannan, there are a number of reliable indicators that can identify bottoms from an on-chain perspective. One of these is the market value-to-real value (MVRV) ratio, which divides an asset’s market value by its net capitalization (valuing all bitcoins based on the price per coin moved. Finally).
“Since the unrealized losses on tokens are very high, I think now is a good time to buy. If a lot of participants are holding tokens with high unrealized profits, you might think that many people are looking to sell, earn some profit.”
He Zhanzhong (Gmiddle) and Brannan (pocean)
Derivatives from MVRV, including the Output Return to Expense Ratio (SOPR) and Net Unrealized Profit and Loss (NUPL), can also help identify market tops and bottoms—especially when they cross key rate thresholds.
CryptoQuant tracks MVRV rates based on different age groups when token movements occur – including a day, a week, a month…
price forecast
When asked about their near-term price predictions, both Brannan and Chung agreed that a retest of the $16,000 low is unlikely for Bitcoin.
“Without a black swan event like Russia deploying a nuclear weapon in Ukraine or Binance crashing … it’s unlikely to make lower lows,” Chung said.
Chung added that Bitcoin could even surpass its previous all-time high in the second quarter of 2024 — right around the time of the next Bitcoin halving.
In the long run, Brannan speculated that Bitcoin could reach $1 million by 2030. In his view, tighter regulation in the U.S. could benefit the asset.
“Compared to ‘crypto,’ I think bitcoin is difficult to manage. I think that could be beneficial.”
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