Cryptocurrency advocates are on the edge of their seats, eagerly awaiting the market’s next upward turn. Market analyst Michael van de Poppe has shared his insights, focusing on the potential valuation of Bitcoin during this anticipated cycle. His analysis centers around institutional involvement and the concept of diminishing returns.
Exploring Diminishing Returns in the Crypto Market
Van de Poppe suggests that the current market is witnessing an unprecedented influx of institutional capital. A key point of his analysis is the pattern of diminishing returns, where each market cycle reaches a lesser peak in percentage gains compared to the previous ones. For instance, while the 2017 market peak resulted in a 12,000% gain, the 2021 cycle saw a rise of 2,000%. Despite this pattern, van de Poppe raises questions about the strength of this assumption.
Challenging the Diminishing Returns Narrative
The analyst expresses skepticism towards the diminishing returns hypothesis, especially given technology stocks’ performance after the 2008 financial crisis, suggesting that Bitcoin could similarly attract substantial investment. He also speculates on Bitcoin’s price potential if external market pressures, like those from FTX’s previous influence, are absent in the current cycle, hinting at a possible surge beyond previous highs.
Relevance of Bitcoin’s Four-Year Cycle
Van de Poppe discusses Bitcoin’s four-year cycle, traditionally tied to supply and demand shocks from halving events. He notes that market dynamics have shifted with new investors less concerned with these events. The analyst acknowledges the halving’s historical impact, but he anticipates that the upcoming halving may not play as significant a role as in past cycles due to the changing market landscape.
Impact of the Approved Spot Bitcoin ETF
The recently approved Spot Bitcoin ETF is another factor that could significantly influence the market, according to van de Poppe. He believes that this introduction has not been fully accounted for in the market. The ETF has already seen billions of dollars in initial investments, implying that it may catalyze a prolonged bull market.
Bitcoin’s Trajectory Towards Global Acceptance
In the broader context, van de Poppe positions Bitcoin as steadily moving towards global acceptance. He suggests that institutional investment in Bitcoin is not necessarily a vote of confidence in the cryptocurrency but rather reflects growing concerns over the reliability of traditional financial systems. With third-world countries already gravitating towards Bitcoin amidst inflation risks, the analyst predicts a growing institutional turn towards Bitcoin and gold as safe-haven assets.