trends in crypto market

The Bullish Case for Crypto in Q4, 2021

Bitcoin has been relentlessly increasing in price for the past decade. The success of the original cryptocurrency gave birth to a brand new industry that disrupted finances forever. This growth has made trading platforms like Bitlevex increasingly popular over the years, allowing users to make incredible profits with modest starting capitals.

However, the crypto markets had a difficult summer in 2021. After reaching new all-time highs in May, Bitcoin crashed more than 30% following institutional concern about its impact on the environment. The crash dragged the rest of the market with it and caused fear among investors.

That said, it looks like we can finally see some light at the end of the tunnel. Sentiment in the market is returning to positive and October started on a bullish note. In this article, we take a look at Bitcoin and cryptos and try to lay out the factors that make us believe that Q4 2021 can be quite bullish for this market.

What happened to cryptocurrencies in 2021?

The first half of 2021 was idyllic for crypto investors. Many coins saw their value decuple in 6 months, most of them reaching their peak in May 2021. Bitcoin and Ethereum led the charge, racing past previous all-time highs and registering over 300% gains in one year.

However, in May, the market hit a point of exhaustion. A new round of fear and doubt started spreading in the crypto investor community, beginning with Tesla raising concerns about the nefarious environmental impact of Bitcoin mining.

Additionally, the Chinese government proceeded to crack down on crypto mining operations, which added to the bearish sentiment in the markets. This is understandable, as China holds more than 60% of the mining hashrate for Bitcoin and other proof-of-work coins.

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This resulted in some fundamentally weaker coins crashing more than 50% of their peak value. Many believed that the bullish cycle was over, even though many metrics showed us this was but a mere correction, albeit quite consequential.

Starting in June, the market started to slowly recover, with September proving to be another difficult month, with crucial levels acting as strong resistances.

Why do experts think the bull run is just starting?

That said, there are many macro indicators that are showing us that this bull run may just be at its beginning. Below are some of the main reasons many investors in the crypto community are still hoping for an exponential price rally in the last fiscal quarter of 2021.

Bitcoin supply shock

Bitcoin’s price is directly dependant on supply and demand. The supply is controlled through mining, while the demand slowly increases over time, together with the mass adoption of digital assets.

However, some indicators are showing that Bitcoin is entering a supply shock, for a couple of different reasons.

  • Miners are stockpiling BTC rewards instead of selling them on the open market. This means that miners feel BTC should be sold at a higher to snake their efforts and investment worthwhile.
  • Long-term holders aren’t moving their coins. Pioneering investors are waiting for a price increase to part with their BTC. Some even believe that a big portion of holders won’t sell before Bitcoin reaches 6 figures.

This decrease in supply should inevitably increase the price of BTC, following the simple law of supply and demand for commodities.

Bitcoin’s golden cross

Recently, the Bitcoin daily price chart registered an extremely bullish indicator commonly referred to as the “golden cross”. This is when the 50 daily moving average crosses above the 200 daily moving average, and is usually a precursor to a strong and relentless bullish cycle.

Every golden cross in bitcoin’s history was followed by at least a 200% price increase and up to 5000% in some cases. The only exception is the COVID19-related market crash of March 2020.

Bitcoin mining is turning greener

While China banning Bitcoin miners was evidently a bearish event, it was only for the short term. Miners have already relocated to other countries and are resuming business as usual. What’s more, is that they are increasingly starting to use sustainable sources of energy for mining.

trends in crypto market

In China, the main source of power for BTC mining was coal, which increased the carbon footprint of the original crypto considerably. Miners have now more consistent access to greener sources of energy such as solar, wind, geothermal, or hydropower. Thanks to this, the negative narrative of PoW blockchains is slowly eliminated.

Conclusion

In this article, we analyzed three major factors that could have a significant bullish impact on Bitcoin, and on the entire cryptocurrency market by proxy. Once bitcoin starts to rally, altcoins are bound to follow shortly. When previous high prices are breached, the sky could be the limit, and we could see a single Bitcoin reach a 6-figure value by the end of 2021.

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