By combining a deep understanding of market cycles, staying informed about the ever-changing landscape of cryptocurrencies, and leveraging technical analysis, we can confidently position ourselves to forecast the next crypto bull run.
In this article, we will explain how to forecast the next crypto bull run. We will analyze market cycles, explore the current state of the crypto market, and examine critical technical indicators to watch out for.
Market Cycles
The crypto market is working in cycles, and it is vital to understand these cycles, especially when trying to forecast the next crypto bull run. Many factors influence these cycles; knowing the most significant ones will help navigate this space.
One of the key drivers is institutional adoption. For example, Bitcoin has already been embraced by institutions like Tesla, Square, and Paypal. These companies either added Bitcoin to their balance sheet or offered their customers the ability to transact in Bitcoin. So the more institutions adopt Bitcoin, the more big money flows into it, giving it the potential to attract more investors from big companies or public entities.
Also, Bitcoin's limited supply and halving events are significant factors. The scarcity of Bitcoin is a fundamental part of the value proposition. The halving events occur every four years and reduce the rate at which new coins are created. Past halving events, for example, led to enormous price surges. For instance, after the first halving event in 2012, Bitcoin experienced a jaw-dropping price surge of over 8,000%.
Similarly, the second halving event in 2016 resulted in a more than 2,000% price surge. The most recent halving event in 2020 set the stage for a bullish trend, with Bitcoin's price quadrupling within a year.
Another key factor is mainstream adoption. It is a big driver of market cycles, as the number of crypto holders has reached 400 million worldwide. The more people embrace crypto and incorporate it daily, the higher the demand will likely surge in the next run, as word of mouth could trigger the next bull run.
We must also recognize the role of countries when talking about market cycles. El Salvador became the first country to adopt Bitcoin as a legal tender in 2021. This groundbreaking move set a precedent that showcases the growing acceptance of cryptocurrencies at the national level.
You must notice that countries with substantial gold reserves may consider Bitcoin an attractive alternative for diversifying their assets. The presidential candidate Robert Kennedy even proposed to back the US dollar with Bitcoin. And as more nations incorporate crypto or even make it legal tender, more countries will feel comfortable and do the same.
It is not without danger, and we must stay realistic. For instance, some jurisdictions are crypto-free zones, like the UAE, fostering innovation and attracting investments. Also, other governments take a harsher stance by banning cryptocurrencies altogether or creating penalties for their use. Also, speculation persists that operation chokepoint in the United States may ban all currencies after the banking crisis.
Current State of the Crypto Market
The current state of the cryptocurrency market is a mixture of notable progress and setbacks. We are witnessing a rapid influx of new builders joining the Web3 space, academic research is advancing, and also crucial infrastructure is continually improving. A significant milestone worth mentioning is the transition of Ethereum to an energy-saving proof-of-stake mechanism. Ethereum now uses less than 1% of the energy it used before.
Unfortunately, some adverse events have garnered attention, resulting in project failures, investor losses, and a decline in activity within the decentralized finance (DeFi) and non-fungible token (NFT) sectors. These were incidents like 3 Arrows Capital or Do Kwon, who was even arrested at some point. Not too long ago, the FTX scandal also shed a bad light on the whole industry. Nevertheless, these setbacks offer valuable lessons that will contribute to the maturation and resilience of the market.
Market cycles in the cryptocurrency space follow a logical pattern where rising prices often drive innovation and attract new participants. Remembering that these cycles are a natural part of the industry's growth trajectory is crucial.
Regulatory developments are also shaping the landscape, with proposed bills, court deliberations, and enforcement actions creating a dynamic environment that fosters necessary checks and balances. Just recently, the court case against Ripple was won, which creates a highly positive precedent for all other projects in the industry. Thank you, Analisa Torres, for that.
Despite these challenges, we find ourselves at a unique juncture to champion and advocate for decentralized systems as resilient alternatives to traditional centralized models. The potential for Web3 technologies to reshape industries and empower individuals is excellent. As we navigate this evolving landscape, we must continue pushing boundaries, fostering innovation, and building robust and secure platforms that drive meaningful change.
When we zoom out and consider the broader adoption of cryptocurrencies since 2016, it becomes evident that the industry has witnessed significant growth and progress. Price fluctuations, while capturing attention, do not provide the complete picture. Instead, we must analyze other indicators that reflect the industry's overall health and development.
Active addresses, academic publications, and developer activity are just a few of the metrics that highlight the industry's upward trajectory. By examining the comprehensive state of crypto indices and presentations, we can gain a holistic view of the progress and potential. If you are not convinced by all the metrics but rather rely on the words of famous entrepreneurs and investors, listen to Chris Dixon.
"Things that look interesting to smart people usually do so because they are rich with product possibilities. These possibilities eventually become a reality. Toys become must-have tools. Weekend hobbies become mainstream activities. Cynics sound smart, but optimists build the future." - Chris Dixon.
The adoption of innovative technologies takes time, often spanning several decades. Often, there needs to be more clarity on why or where the next big company will appear. However, it is clear that the crypto industry at least offers this platform to create the next company.
Comparisons to Google, which emerged as a dominant force within a decade, provide an insightful perspective. Cryptocurrencies are on a similar trajectory, and we are now entering the second stage of a 20-year mass adoption cycle. Therefore, embrace a long-term mindset and appreciate that we are still in the early days, with untapped potential and uncharted frontiers awaiting exploration.
Indicators
While knowing that the market operates in cycles or being able to analyze the current state of the crypto economy plays a massive part in forecasting the next crypto bull run, it is not enough. Narratives are always different, and your emotions or lack of information may create a false idea of the current state.
You should not rely on opinions and various macro analyses only but also take in hard facts. In our case, these hard facts are numbers provided by various technical indicators. Not only will the technical indicators give us a wider information pool, but they will also provide us with a way to spot entry positions for the next bull market. Hence, without further ado, let us review the leading technical indicators you can use.
Technical Indicators
1. Fear and Greed Index: A significant increase in the Fear and Greed Index, reaching levels above 70 or 80, may indicate an overbought market and the potential for a bull run beginning.
2. MVRV Z-Score: When the MVRV Z-Score enters the pink box, above 7 or 8, it suggests that the market value is unusually high above-realized value, indicating a potential end to the bull market. Conversely, when it enters the green box below 2 or 3, it presents an opportune time to consider buying Bitcoin.
3. Realized Price: When the market price consistently remains above the realized price for an extended period, it may indicate the start of a bull run.
Even more, when predicting the next bull run, Japanese candlestick patterns might come in handy to identify entry points. Pairing numerical narratives birthed by technical indicators like the ones discussed above with visual cues from candlestick formations can lend valuable insights to chart a course.
Technical markers offer data-driven forecasts that either provide concurrence or enhance strategic calls derived from candlestick patterns, amplifying the overall trustworthiness of your trading approach. For example, coupling a positive sentiment-bearer like the "Bullish Engulfing"—hinting at a potential tide-turn—alongside momentum indicators such as Moving Average Convergence Divergence (MACD) can solidify confirmation towards upward march predictions.
On another occasion, bullish deviation flag bearers like "Morning Star" and "Bullish Harami," indicative of likely bullish course corrections, could be teamed up efficiently with assurance providers like Relative Strength Index (RSI), ratifying underlying buy waves.
Remember, steadfast due diligence in holistic analysis and strategic restraint remain essential when venturing into these combined methodologies.
Other Non-Quantifiable Indicators
1. Multi-month accumulation bottom: Several months of sideways price action following a significant decline may indicate the start of a bull market.
2. Undervalued metrics: Bitcoin's price being significantly below its Energy Value or receiving a Hash Ribbon Buy signal may indicate the beginning of a bull run.
3. Sentiment change: Positive price movements on negative news, Bitcoin outperforming altcoins, or a rapid price rebound after negative events can signify a shift in sentiment and the start of a bull market.
4. Smart money accumulation: The silent accumulation of Bitcoin by institutional investors over a sustained period may indicate the expected start of a bull market.
Conclusion
In conclusion, we can gain valuable insights into market sentiment and behaviour by analyzing indicators such as the Fear and Greed Index, MVRV Z-Score, and realized price. Additionally, considering factors like multi-month accumulation bottoms, undervalued metrics, sentiment changes, and smart money accumulation can help us identify the beginning of a bull market.
While the path is unclear, the potential for positive change and transformative impact offered by cryptocurrencies is huge. As we navigate the ever-evolving crypto landscape, let us remain steadfast in our belief and continue to explore the exciting opportunities this nascent technology brings.
Written by
Paul Kinyua
Paul Kinyua is a passionate researcher, writer, and editor with a deep interest in cryptocurrencies and blockchain technology. He’s a tech enthusiast and educator who enjoys unraveling the complexities of blockchain technology for readers.
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