As the total market value of cryptocurrency fell below $ 2 trillion last week, top executives in cryptocurrency are increasingly talking about a possible ongoing bear market, or “cryptocurrency winter.”
Contrary to the expectations of many in the crypto market, Bitcoin (BTC) failed to rise above $ 68,000 in 2021 and continued to fall below $ 40,000 in early 2022, resulting in huge losses for crypto investors such as MicroStrategy.
However, according to Vitalik Buterin, co-founder of the Ethereum blockchain, a potential crypto winter could be very beneficial for the industry, as it will give a boost to technology improvements. Buterin said in an interview with Bloomberg on Saturday:
“Winter is a time when many of these apps are going down, and you can see which projects are really sustainable in the long run, as is the case in each of their models, their teams and their employees.”
The 28-year-old crypto billionaire notes that people “who are deep inside crypto, especially construction” actually welcome to the bear market. “They welcome a bear market because when there are long periods where prices rise in huge quantities, it obviously makes many people happy, but also tends to attract a lot of very short-term speculative interest,” Buterin said. added.
If this is true, there will definitely be plenty of time for crypto projects to improve the technology before the next rally, as some crypto experts believe that the next bull market will not come until the end of 2024.
Du Jun, co-founder of the crypto exchange Huobi, believes that the next bitcoin rally will not take place until 2024 and is likely to take place after the fourth bitcoin halving, which is expected to take place in July 2024.
All three previous BTC halves, including the one that occurred in 2020, led to a subsequent increase in the price of bitcoin due to the automatic decline in the supply of new BTC. The next bitcoin halving happens only once every four years, and will reduce the bitcoin block reward from 6.25 BTC to 3.125 BTC.
Referring to the massive crypto winter of 2018 that followed the second Bitcoin halving and subsequent 2017 rally, Dow emphasized that the crypto market is moving in cycles related to the halving, noting:
“If this cycle continues, we are now in the first phase of a bear market. After this cycle, we will not be able to welcome the next bitcoin bull market until the end of 2024 / beginning of 2025.
Bitcoin halving chart. Source: Natixis
You added that it is very difficult to predict the exact cycles of the cryptocurrency market because there are many other factors, including geopolitical issues such as war and COVID-19.
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Earlier, Jirayuth Sruupsrisopah, CEO of Thailand-based Bitkub Capital Group Holdings, predicted that a “golden period” for Bitcoin and the broader crypto markets would come in 2024 due to the BTC halving.
At the end of 2021, Kraken CEO Jesse Powell also talked about the possible approach to a cryptocurrency winter, noting that anything under $ 40,000 is a “buying opportunity”.
Bitcoin is trading at $ 37,653 at the time of writing, down 33% from the last 365 days, according to data from CoinGecko.