The bull cycle will extend through 2025 and perhaps beyond, Grayscale says.
The continuity of the price increase will depend on fundamental factors.
With the beginning of 2025, after a bullish year for bitcoin (BTC) and multiple cryptocurrencies, questions arise about where the market is in the cycle. Will the uptrend continue or has it reached its maximum?
Well, according to Grayscale, a bitcoin fund issuing company, The current bullish period of bitcoin and cryptocurrencies is still far from over. “The current combination of indicators is consistent with an intermediate stage of the market cycle,” the company maintains in a new report.
“As long as it is supported by fundamentals, such as adoption and macro market conditions in general, we see no reason why the cryptocurrency bull market cannot continue into 2025 and beyond,” the company underlines.
The price of bitcoin is characterized by recurring cycles of bull and bear marketswith higher prices in each one. The rising periods have always occurred around each halving, an event that reduces the issuance of BTC by half every four years.
The first bull cycles in bitcoin history were relatively short and steep: the first lasted just under a year and the second two years. In both cases, its price rose more than 500 times from the previous cyclical low.
On the other hand, the next two cycles lasted just under three years each and obtained lower returns than the previous ones. In one, it appreciated more than 100 times, while in the next 20 times.
The current period of bitcoin appreciation, which began in November 2022, has been going on for just over two years with a 6x increase, as the graph shows. Therefore, Grayscale highlights that history says this bull market may extend both in terms of duration and magnitude.
Bitcoin Recurring Cycles May Change
“The study of past cycles can give investors some guidance on the typical statistical behavior of bitcoin and can therefore be informative for risk management decisions,” the company mentions.
Regardless, each of the past price cycles had their own unique drivers. Therefore, the investment company emphasizes that there is no reason why future price returns will accurately reflect past experience.
Furthermore, Grayscale distinguishes that recurring cycles in the price of bitcoin may be modified. This is as the market matures and is adopted by a broader range of traditional investors, while the impact of halvings diminishes.
The approval of bitcoin and ether exchange-traded funds (ETFs) in the United States deepens has resulted in more than USD 36 billion of net capital inflows. He also highlights that it has helped bring these assets to more traditional portfolios.
Grayscale sees it likely that the entry this year of a pro-crypto government “will bring more regulatory clarity to the market and help secure a permanent place for digital assets in the world’s largest economy.” This is a major change compared to the past, when observers questioned its future, he recalls.
“For these reasons, valuations of bitcoin and other cryptoassets may not follow the recurring four-year cycles that have characterized the asset class during its early history,” Grayscale insists. It clarifies that they are part of an asset class in the process of maturation.
Bitcoin on-chain indicators show that the bull market is not over yet
Beyond the aforementioned scenario, There are classic on-chain bitcoin cycle indicators that are still below levels seen at peaks of past bull cycles.. Grayscale highlights as an example the MVRV ratio, which measures the relationship between the market value and the price at which each currency was last traded.
At the peaks of the last four cycles, the MVRV ratio reached a value of at least 4. Currently, it stands at 2.6, which suggests that the last cycle could have further to go. However, this metric has marked a lower maximum level in each cycle, so it is possible that the peak will be seen before it reaches 4, Grayscale clarifies.
The amount of coins moved in the last year, in relation to the total supply, is also an indicator that predicts greater increases to come. In each of the last four cycles, this measure reached at least 60%. Currently, this number is around 54%, as you can see below, which suggests that the current bullish period is not over.
With this stage in place, Grayscale reinforces its optimism for the bitcoin and cryptocurrency market this yearas the investment company Bernstein also did this week. As reported by CriptoNoticias, it has reaffirmed its price target of USD 200,000 for BTC in 2025, driven by growing institutional demand.
