Are We in a Bitcoin Supercycle?

Bitcoin Supercycle, BTC consolidating at $60k, and crypto's $2 trillion market cap.

The Bitcoin Supercycle

I’ve written about a Bitcoin Supercycle before.

The idea is gaining traction.

It’s igniting debates between Bitcoiners and investors about whether or not it’s actually occurring as we speak.

Bitcoin has standard market cycles based around its halving events.

What’s a halving?halvings decrease the supply output, cutting the rewards that Bitcoin miners receive in half.

This triggers a bull year followed by three bear or sideways years.

We saw this most recently between 2017 and now.

Bitcoin hit the $20k price point before proceeding to trade down throughout all of 2018 and then sideways for the next two years.

Then, we entered our current cycle.

Critical Mass

The concept of a Bitcoin Supercycle implies that Bitcoin will no longer follows its historical pattern built around the halvings.

It assumes we’ve hit a critical mass of users.

This is a new base layer of Bitcoin HODLers that are both more plentiful and more heavily invested than during prior cycles.

These include the Michael Saylors and MassMutuals of the world but also the 6.1 million active Coinbase users and the like.

It’s a mix of both sophisticated and corporate investors and sustained growth among individual Bitcoiners.

$60k Is Not the Top

Dan Held says a Bitcoin Supercycle means:

Reduction in Supply + Increase in Demand = Number Go Up

The key is that Bitcoin looks different this time.

The supply reduction is driven by that implied critical mass of users and longer term holders that includes a segment of next-gen institutional buyers.

They’re gobbling up Bitcoin, reducing supply, and creating a cycle of demand that leads to number go up…

BTC Is Consolidating

Bitcoin has closed within 10% of $60,000 for 10+ days.

It’s consolidating at $60k.

If you zoom out on the month, BTC has done this for even longer with the exception of a single 48 hour period.

How Bullish Am I?

So, Bitcoin Supercycle…

Do I think we’re in it?

Short answer—I’m cautiously optimistic we are.

Long answer—the next two or three quarters will determine where Bitcoin goes from here. We’re approaching the halfway point in the typical Bitcoin bull period if BTC continues to behave as we’ve seen in the past.

A LOT IS HAPPENING IN BITCOIN

  • Coinbase is going public

  • US Bitcoin ETF applications

  • The Crypto Climate Accord

  • More institutions—Liberty Mutual, State Street

  • $2 trillion crypto market cap

Each of these points deserves its own conversation.

Let’s touch on the last point.

Crypto Market Cap Tops $2 Trillion

The overall cryptocurrency market cap topped $2 trillion as of last week. $1.1+ trillion of that is thanks to Bitcoin.

Shout out also to Ethereum.

Ethereum is dancing around a quarter trillion.

ETH continues to test new highs.

Similar to Bitcoin, Ethereum has closed within 10% of a $2,000 price point for over a week. Always remember though that BTC drives the market.

Winklevii Predict $10 Trillion

The Winklevoss twins are floating the idea that Bitcoin could reach a $10 trillion market cap and overtake gold in the next few years.

To some, this is conservative.

Michael Saylor has tossed around $100 trillion.

Either way, BTC is already 1/10th the way to $10 trillion.

If Bitcoin hits a $10 trillion market cap, imagine what the entire cryptocurrency market cap will look like. A Bitcoin Supercycle could spur this on.

My belief is that BTC will continue to retain its dominance.

Bitcoin might drop below 50% of the overall crypto market cap but I don’t see it ceding much more without major crypto industry disruptions.

A $10 trillion Bitcoin market cap would be great for crypto overall and would force the traditional financial system to wake up.

If some institutions and financial players aren’t paying attention to Bitcoin yet, they will be when it tops a $10 trillion market cap.

Read More on the Bitcoin Supercycle

Bitcoin Supercycle?

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