It’s fair to say that we’re all tired of this bear market.
After hitting an all-time high of $20,000 in January, Bitcoin spent much of 2018 bouncing between $6,000 and $7,000. A second dip at the tail end of the year saw it drop below $4,000, and it’s hardly budged since. It’s a similar story across all the leading altcoins.
Let’s look ahead to rosier times. What could kickstart the next crypto bull run?
Don’t Expect Another 2017 Boom
The 2017 crypto boom was unique. It was the first time that cryptocurrency became a household term around the world.
Everyone saw the colossal growth figures and wanted a piece of the pie. It led to millions of people with no knowledge of how crypto works or how blockchains work to invest significant amounts of cash into the industry.
Ultimately, speculation (and probably some market manipulation) fed the bull run. Many of those investors lost considerable amounts of money. It’s unlikely that they’ll make the same mistakes again.
But that doesn’t mean we won’t see another bull run. Only that (hopefully) this time, it will be driven by more sensible and tangible reasons.
1. Global Recession
Stocks have been on a decade-long bull run. It has now been more than 3,500 days since we last experienced a bear market, making the current run the longest bull market in the post-war period.
But there are signs that the boom is coming to an end. Inflation is growing, home sales are declining, credit card debt is rising, unemployment is at record lows, and the yield curve for three/five-year treasury notes has inverted. Many leading economists expect a recession within the next 18 months, if not sooner.
Traditionally, recessions see investors move into gold. Cash does not make you money, meaning your buying power is eroding. Gold protects your money’s purchasing power, and the underlying asset also rises in value.
But there are hopes that the next recession could see investors run to Bitcoin instead. Often described as “digital gold,” it shares many of the same investment characteristics as the metal.
A sudden influx of investors after a market crash would see prices rise dramatically as demand goes up.
2. Companies and FOMO
You can argue that the 2017 bull market was driven by regular people’s fear of missing out (FOMO). There’s a school of thought that the next bull market could be driven by companies’ FOMO instead.
As more and more companies invest a significant amount of capital in blockchain and crypto technology, competitors are likely to do the same thing to avoid being left behind and potentially losing customers.
We’re already starting to see such situations on Wall Street. Banks such as Fidelity, Goldman Sachs, JP Morgan, and Citigroup are jostling with each other in a bid to create, develop, and offer crypto services. It might not be long until we see the same situation spread to the high street.
3. Bitcoin and the Lightning Network
Let’s take a step back. At the moment, the Bitcoin network can process around seven transactions per second. In comparison, the Visa network can handle up to 50,000 per second.
Bitcoin’s limited capacity has led to long transaction processing times and higher fees. Those two problems restrict Bitcoin’s usefulness as a legitimate currency.
Some altcoins—such as Dash—can process more transactions per second. But because Bitcoin still remains the largest coin by some distance and is the “on-ramp” for many users, it badly needs a speed boost.
The Lightning Network could provide that boost. However, the community disagrees over its implementation; it’s why we’ve seen so many Bitcoin forks over the last 18 months.
If Bitcoin itself adopts the Lightning Network, the coin suddenly becomes a lot more feasible as a real-world currency. The hope is that businesses would become more willing to use it and the price would rise.
4. Amazon Accepting Crypto
Changpeng Zhao, the CEO of crypto exchange Binance, believes the starting gun for the next crypto bull run lies in the hands of one company—Amazon.
In a recent Twitter chat with his followers, he said that if Jeff Bezos’ company were to start accepting or issuing crypto payment, the next bull run would begin immediately. Amazon is already experimenting with blockchains.
Of course, this all feeds into the idea of adoption. If any large tech company (Apple, Google, Facebook, Netflix, etc.) started accepting or issuing crypto as standard, the price of the leading coins could multiply overnight.
At the moment, Microsoft is the only giant that has dabbled with crypto. It accepts Bitcoin in its store, but the feature is not heavily advertised.
5. Bakkt Going Live
Many people are hoping that the much-anticipated launch of Bakkt could help to start the next crypto boom.
For those who aren’t aware, Bakkt is the brainchild of Intercontinental Exchange (ICE). It is the same company that owns and operates the New York Stock Exchange. Bakkt will provide payment services, futures contracts, savings plans, and crypto wallets in an attempt to provide a single platform for individuals, merchants, and institutions.
The launch date for Bakkt has already slipped a couple of times. It’s currently expected to go live on January 24, 2019.
If you’d like to learn more, we’ve explained why Bakkt is so crucial to the crypto sector.
6. Cryptocurrency ETFs
Exchange-traded funds (ETFs) are investment funds that can be traded on stock exchanges like regular equities. They gained widespread popularity in the early 1990s and have since seen more than $2 trillion of investment.
Investors like ETFs due to their flexibility, diversification potential, lower costs, and tax benefits.
Currently, there are no crypto ETFs. Several groups have come up with proposals for how a crypto ETF might look, but so far, the U.S. Securities and Exchange Commission (SEC) is yet to approve them.
We were expecting an answer as long ago as June 2018. However, decision day has slipped twice. We are now hoping for an answer in February 2019.
The assumption is that when (not if) the SEC approves crypto ETFs, vast amounts of institutional money will quickly flow into the sector, thus firing the starting gun on a new bull run.
Ultimately, we don’t know when the next crypto boom might start, but we do know that it will start. Check out our article about the safest time to invest in crypto to learn more.