One of the main debates taking place in the cryptocurrency universe is about how and when Bitcoin's next Bull Run will be.
There are several theories that try to predict this movement and justify the reasons why Bitcoin could reach even 50,000 USD.
At Mercurius Research # 04 we will bring that answer to you and show you the reason for the next Bitcoin Bull Run!
NOTE: It may happen soon …
How to price Bitcoin?
As everyone knows, Bitcoin is the world's first scarce digital asset. Created in 2009, the cryptocurrency is considered revolutionary by several experts who note the asset's great utility soon.
However, as it is a very recent asset, there are few models that can price it. I bet you don't even know for sure what the real price of Bitcoin should be.
There is a law that is universal in terms of pricing, the law of supply and demand, and that is why we will try to price BTC.
The cryptocurrency has an inelastic supply curve (fixed at 21 million units), so its offer does not affect the price of the asset so much, and what will make it appreciate is the demand for it …
One of the best known theories for projecting the adoption of technological innovations is the Rogers Curve. This theory, which has already been applied to predict the adoption of the internet, use of automobiles, among others, shows that the adoption of a technology starts slowly and, only after its validation, it starts to occur exponentially.
I'm sure that, when looking at this curve, you must have been thinking: "this curve does not represent the price of BTC, it is much more volatile and fickle than this graph shows".
Could it be that the price of Bitcoin does not behave according to the demand for the asset? Or is the Rogers Curve not applied to Bitcoin?
Calm down, none of these alternatives is correct. If we observe the price of cryptocurrency without considering the moments of Speculative Bubbles (which are fronts in the asset), one can perceive the growth in the value of this in an increasing and consistent way and correlated with its adoption.
But what would justify this bubble (and volatile) behavior in some periods?
Another phenomenon that occurs commonly in great innovations, the cycles of technological Hypes.
Similar to what happened with the majority of “.com companies” in the 2000s, it is normal that in the beginning of a great innovation there will be cycles of adoption hypes that momentarily drives up the price of that asset and, after a series of frustrated expectations, part of the investors exit that market.
You must remember the euphoria that was in the 2000s, with the emergence of the internet, and the disappointment when realizing that it did not supply all the problems of the world at that time, this being a perfect example of Technological Hype.
These Hypes cause technological innovations, in their beginning, to behave similarly to financial bubbles, which causes high volatility for these assets and cause them to show cycles of appreciation and devaluation, marking eras of development and maturity of this new innovation.
An example of this was Intel, which showed an exponential appreciation in the 2000s and quickly depreciated, as well as Amazon, Apple and many others … Did this move remind you of something? Maybe Bitcoin in 2017!
Bitcoin Hype Cycles
Throughout the history of Bitcoin it is possible to observe three major cycles of Hype.
The first was between June 2010 and July 2012, when the price started at 0.08 USD, reached its high at 29.60 USD and ended the cycle at 6.70 USD, being driven by the cyberpunk movement and the beginning of Mt. Gox.
The second Bull Run of Bitcoin moved by Hype was between August 2012 and June 2015, as price starting at 6.65 USD, reaching its high at 1,231 USD and ending the cycle at 263 USD, being driven by the beginning of the development of large exchanges like Coinbase, Bitmex and Kraken.
Infrastructure, regulation and ICOs
Its most recent cycle was between August 2015 and March 2019, with the price starting from a low of 258 USD, reaching ATH 19,365 USD and retreating to 4,095 USD, being a period marked by the creation of infrastructure and market regulation cryptocurrencies (like Bitlicense) and Hype for ICOs, I'm sure you remember.
When observing these cycles, it is possible to conclude three main points: these cycles are increasingly being extended; after the end of each of these eras, Bitcoin showed a great evolution in its structure, and all these cycles were marked by periods of structuring prior to their beginning.
All of these were marked by clear evidence before they occurred and broke major paradigms regarding cryptocurrency.
What will be the reason for the next Bitcoin appreciation cycle?
This is the reason for the next big appreciation of Bitcoin, so that, as in previous cycles, the market is showing clear evidence of this.
The first and clearest is the behavior change From institutional investors in relation to the digital asset. A few years ago Bitcoin was widely criticized by the traditional market and considered a worthless asset. Today, several investors and investment funds are entering this market, for example, we have Paul Tudor, one of the main North American managers using Bitcoin as a diversifier in his portfolio.
The second is the fact that, more and more, infrastructure is being created to support institutional investors, such as the evolution of regulations, creation of own exchanges for institutional investors, development of investment funds in cryptocurrencies, creation of technologies and solutions for custody and more!
Are you curious to know more about the possible reason for the next Bitcoin Bull Run?
We at Mercurius, together with Foxbit and the Cointimes we have prepared a live for this Friday that will explain everything about it, with the participation of big names from both the cryptocurrency market and the traditional financial market.
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A hug and see you next Wednesday.