The conventional wisdom of the cryptoverse is that there is a boom-and-bust cycle to the blockchain and cryptocurrency industry. This cycle is led by the “King of Cryptos,” Bitcoin (BTC). It is programmatically set to have a halving cycle roughly every four years, which cuts the supply of new coins awarded to miners in half. This sends a supply shock to the market, and as seen in the past three cycles, it can lead to dramatic ups and downs.
Dan Held, a Bitcoin educator and marketing adviser for Trust Machines, predicted that Bitcoin would eventually see a “supercycle,” citing the increased value of the network as adoption grows (Metcalfe’s law), increased scarcity due to the halving and increased institutional adoption. This supercycle will, theoretically, see Bitcoin run up to new all-time highs, from which there will be no further downside, as there will be enough adoption and institutional support to continue to prop up the price.
Unfortunately, this support did not occur in the last cycle, and Bitcoin fell from its all-time high of $69,000 at the end of 2021, bringing the rest of the market down with it. Nevertheless, institutional support was growing so much during the last leg of the cycle that exchange-traded funds (ETFs) were approved around the world.
The United States comprises 42.5% of all global equity markets, however, and the largest country in all global equity markets may soon allow spot Bitcoin ETFs to trade. BlackRock, one of the most prominent names in asset management and investment circles, applied for its own spot Bitcoin ETF in June 2023, providing a kind of green light for other institutions to start getting involved.
According to Chainalysis’ recent “2023 Geography of Cryptocurrency Report,” India, Nigeria and Vietnam were the top three countries for crypto adoption in 2023. The U.S. makes up North America’s largest percentage of transaction volume, but the majority of transactions were stablecoin trading, with Bitcoin generally trading less than altcoins. This is not due to Bitcoin’s lack of perceived value on the market but rather the lack of necessity for Americans to use it for payments.
In order for the supercycle to happen, ample funds are needed to counter negative sentiments, reestablishing easy access channels between traditional finance and the crypto market, and global governments officially recognizing Bitcoin assets as equal to gold and stocks. According to billionaire venture capitalist and serial blockchain investor Tim Draper, these conditions must be in play for the supercycle to be in full swing.
The Bitcoin supercycle is likely not upon the world for this continued adoption cycle. There is simply too much speculation over adoption and daily usage happening globally for the asset to have no or just a soft correction to cushion the fall once the Minsky moment pops the bubble. 2028, on the other hand, may be a different story altogether.
