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In economics, a “super cycle” denotes a prolonged phase marked by significant expansion in a specific asset or industry. Unlike fleeting bubbles driven by hype, super cycles signify a substantial and enduring transformation rooted in robust fundamentals spanning numerous years.
Let’s explore the Bitcoin Super Cycle theory in this blog.
The Build-up of The Bitcoin Super Cycle
There’s a widely accepted notion of a boom-and-bust cycle centered around Bitcoin, often called the “King of Cryptos.”
Bitcoin denoted as BTC, undergoes a halving event roughly every four years, slashing the issuance of new coins awarded to miners by half. This halving creates a supply shock, a phenomenon evident in the significant price swings observed during the past three cycles.
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Numerous factors contribute to this cyclic pattern, including the network’s overall adoption, the emergence of new use cases like the Lightning Network for scalability and Ordinals for Non-Fungible Tokens (NFTs), and the growing trend of institutional adoption.
In 2020, Dan Held, a prominent Bitcoin educator, and Trust Machines marketing advisor floated the concept of a “super cycle” for Bitcoin. He based this concept on the escalating network value propelled by adoption, the diminishing supply triggered by halving events, and the increasing interest from institutional investors.
The super cycle paints a picture of Bitcoin soaring to unprecedented price levels, sustained by ongoing adoption and institutional backing, potentially mitigating any significant downside risks.
What is the Bitcoin Super Cycle Theory?
The Bitcoin Super Cycle theory explains that Bitcoin’s price will continue to surge indefinitely, defying the traditional four-year market cycles that have characterized its price history. Advocates of this theory argue that increased institutional acceptance, macroeconomic trends, and improved user experiences will drive sustained growth in the crypto market.
Was Bitcoin Super Cycle Dead? A Peek Into the History
As 2021 drew close, the crypto space experienced a notable chill, marking the onset of “crypto winter.” Despite the anticipation fueled by reduced supply, burgeoning network growth, and escalating institutional support, Bitcoin saw a sharp decline from its lofty peak of $69,000.
The approval of Exchange-Traded Funds (ETFs) worldwide seemed to signal a new era. Canada, leading the charge, launched the first physically-backed BTC ETF by Purpose Investments in February 2021. Subsequently, CI Galaxy Bitcoin ETF and Evolve Bitcoin ETF gained approval in Canada. Meanwhile, Germany, Brazil, and Australia joined the ETF frenzy, albeit with spot Bitcoin ETFs.
However, the enthusiasm surrounding these products failed to meet expectations, especially when compared to the potential influence of the United States market. With the US commanding a staggering 42.5% share of global equity markets, the anticipation mounts for the possible introduction of spot Bitcoin ETFs in the country.
Enter BlackRock, a titan in asset management, whose application for a spot Bitcoin ETF in June 2023 hinted at a significant shift. While institutional involvement remains pivotal, it’s clear that numerous factors are at play in shaping Bitcoin’s trajectory.
Bloomberg’s Prediction in December 2023
Bloomberg predicted that Bitcoin’s surge above $42,000 in December 2023 marked the beginning of an impending crypto super cycle, propelling the leading crypto to surpass $500,000. The rally reflected investors’ growing appetite for crypto exposure amidst improving macroeconomic conditions.
With Bitcoin posting gains for the third consecutive month and breaching an $800 billion market cap, Bloomberg analysts anticipated even more bullish forecasts for BTC and other cryptos. Speculation surrounding the approval of Spot ETFs and the scheduled Bitcoin Halving in April 2024 further fuels optimism for Bitcoin’s potential surge.
Bitcoin University’s Views on the Super Cycle
“Bitcoin has been the top-performing investment globally since its inception in 2009, yielding extraordinary returns annually,” says Bitcoin University’s Head Professor Evander Smart. “In 2023, Bitcoin’s Wall Street adoption has been a game-changer, with institutions like Blackrock and Fidelity now offering a Bitcoin Spot ETF, amplifying Bitcoin’s financial market value.”
Bitcoin has soared over 70% in 2023, surpassing $72k in Q1. Evander predicts this is just the tip of the iceberg, ushering in a Bitcoin’ Super Cycle.’
“With institutional investors flooding the market, Bitcoin’s supply is dwindling while demand skyrockets. The impending Bitcoin Halving event, reducing daily mining output by half, further exacerbates supply constraints. As a result, Bitcoin’s price is expected to continue rising, with fewer market corrections projected in the future.”
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
