Stay optimistic or start to be bearish, what stage is the current market in?

Original Title: Don't be afraid to dream a little bigger

Original Author: knower

Original Compilation: Luccy, BlockBeats

Editor's Note: The surge in Bitcoin prices has ignited enthusiasm in the market, with various institutions and researchers making hypotheses about the current bull market phase. Crypto researcher knower compared the characteristics of past market cycles and pointed out that despite the significant changes in the cryptocurrency market over the past few years, there are still many signs indicating that we may still be in the early stages. BlockBeats compiles the original text as follows:

If you have been active online in the past week or two, you have likely seen dozens of tweets about the current cycle and when the music will stop. Bitcoin's price has now surpassed $60,000 and has been steadily climbing since the launch of some ETFs, with daily inflows showcasing a wonderful scenario of strong demand and insufficient supply. Fidelity suggests that individuals allocate 1-3% of their portfolios to cryptocurrencies for safe and responsible investing, indicating that after FTX, cryptocurrencies are no longer something to be feared but rather something to be accepted and embraced.

From March 2023 to around October 2023, Bitcoin's price fluctuated between $27,000 and $30,000, and if you were trying to hold on for the long term and expecting a breakout, it could be very frustrating. During this period, there were occasional highlights, but if you expected to earn wealth similar to 2021, not much happened in the public market. We were fortunate with PEPE, Friend Tech, Telegram Bots, and some other activities, but most of these were just temporary distractions, and the entire market was still self-adjusting. There has been much discussion about interest rate hikes, soft landings, and other macroeconomic issues, but honestly, these issues are too far away for me to recall.

The bear market likely ended in March 2023, with Bitcoin soaring from $20,000 to $28,000 in just a few weeks, a moment I fondly remember, even though it was only about a year ago. At that time, the collapse of FTX was finally behind us, the media largely stopped the political persecution of cryptocurrencies, and there was finally some solid price action that allowed crypto Twitter to regain its footing.

Now, a year later, we find ourselves here. The historical highs of Bitcoin and Ethereum are within reach, altcoins are generally performing well, storylines are beginning to form, and the private equity market is rampant again, disconnected from reality. It’s easy to observe the recent behavior of cryptocurrencies and think we are closer to the finish line than the starting point, but I believe this is extremely shortsighted and naive. Not only have we not broken through historical highs, but there are also really not many signs indicating we are approaching some kind of climax.

If you only look at Bitcoin's price movements, you might feel it is a bit overbought. But we no longer live in that world. Larry Fink has risked his reputation on a Bitcoin ETF, and the media and traditional finance people look at him in a shocking and confusing way.

How can an asset manager with trillions of dollars in assets be so humble? This isn’t even real money, there’s no backing! Didn’t you see SBF being tried for allegedly defrauding with cryptocurrencies and ruining lives?

This article will not discuss why Bitcoin is essential or why it deserves respect from the traditional financial system. If you are reading this article, you may already be aware of these reasons and firmly believe in them. Instead, I want to talk about why we may still be relatively early or why there are multiple reasons to remain optimistic for a longer time.

The emergence of ETFs fundamentally differentiates this cycle from previous ones, as there is now an accessible liquidity channel between cryptocurrencies and traditional finance. Unless you have been living under a rock or deliberately ignoring the obvious, traditional financial institutions and participants have been present since the last cycle. Cryptocurrencies have become more mainstream, more accepted in society, and people want to invest or provide investment opportunities in digital assets for their clients. Coupled with the obvious fact that a volatile market in an upward trend will attract more liquidity and attention, Blackrock, Fidelity, and VanEck can now market Bitcoin to clients without any regulatory or legal concerns; the door has been opened, and there are no signs it will close again.

Since this is an extremely new, unique, and unprecedented event, it is difficult to build a realistic model around ETF inflows. When was the last time a brand new asset class was released to the public? Well, it was probably when gold ETFs were launched, which means it has been about 20 years. You can search online and find the performance of gold ETFs in the first 5-10 years and draw your own conclusions.

Another reason this cycle may differ from previous ones is that while many patterns repeat over and over, cryptocurrencies have matured considerably each year. People on Twitter often point out the top 10 coins from previous cycles, many of which have faded from public memory and completely disappeared from the market, but this is another example of how fast the space moves. If you look at the top 10 stocks by market cap since the early 21st century, you will certainly see many dramatic changes and power struggles, as any economy needs competition to foster growth and progress. For cryptocurrencies, many parts of this process have accelerated, as the industry has transformed from a white paper written by an anonymous individual into a technological phenomenon increasingly capable of disrupting the entire global financial system. There are more market makers, more funds focused on cryptocurrencies, and more venture capital willing to invest in cryptocurrencies. Another observation I have is that recent rounds of project fundraising are more respected than in any previous cycle, almost as if cryptocurrencies are slowly becoming a legitimate asset class before our eyes.

Every bull market provides an opportunity to experiment with new ideas in cryptocurrencies, which has never really been possible on traditional financial tracks, using financial speculation as an innovative "Trojan horse." Bear markets are a purging period where bad ideas, explosions, and tragedies are washed away, hopefully never to happen again. This is healthy because it is clear that cryptocurrencies are far from a mature market, and this will last for a while, which is very beneficial for us. You typically wouldn’t get opportunities like DOGE in the stock market. The closest example of price behavior in the real world for cryptocurrencies is the GME phenomenon, although even this cannot compare to the performance of the average token in 2021. This is a special market, and people like Larry Fink have decided it is worth pushing and leveraging.

I also want to add that while institutional entry into the space may bring negative associations, the emergence of Bitcoin ETFs is more of a positive factor than a negative one. Blackrock is a blessing, and I believe this cycle will be the most spectacular one we have seen. It will take the general public longer to forget FTX and accept that cryptocurrencies are far larger than a fraudulent centralized exchange, but this is to be expected. For ordinary people, it is hard to imagine putting money into such a volatile market, let alone after major media outlets have drilled the FTX controversy into their heads for months, scaring them away from ever wanting to buy tokens again. Just like the entire stock market after Bernie Madoff, not everyone left; he was just a bad apple.

I don’t know how long it will take to reach the speculative levels of 2021, but I believe we are absolutely still far from that point. When I see people on Twitter discussing that we are already in the second half of this cycle, I wonder what kind of audience they are trying to attract. During the last bull market frenzy, I saved a screenshot. It was a list of hot coins with names like Dogelon Mars, BabyCare, and Rainbow Token. What do these tokens do? I don’t know. What are their trading prices today? I’m not sure. I don’t see any scams trading like that today; I don’t see any tokens like Safemoon or Shiba Inu that attract the entire internet's attention and separate fools from their money. Of course, it’s wise to be cautious and not get ahead of yourself too early, but is it really that bad to say we are still early? From an objective standpoint, it can be completely argued that we are still early.

Bitcoin experienced a 20-fold price increase in 2017. Bitcoin rose 10 times from its low in March 2020 and double-topped. If Bitcoin rises 10 times from its low in November 2022, its peak would reach $160,000. When I say this, I know what the rebuttals will be. The obvious rebuttal is that Bitcoin's market cap was much smaller in 2017 and 2020, which is correct. I am not calling for Bitcoin to rise 25 times from here because of ETFs, but it is worth noting how foolish the financial system has become and how rapidly our world is changing due to advancements in artificial intelligence. It is entirely possible that we will create AGI in the next twenty to thirty years, which will have an unprecedented impact on our daily lives and what our future may look like. Sam Altman is trying to raise trillions of dollars to prepare for this, which seems to me to be more optimistic than anything else you could present to me. The U.S. printed a lot of money during the pandemic, things got out of control, and that was just the beginning.

I believe that in a world where artificial intelligence rapidly overturns all previous assumptions about humanity and intelligence, it is not excessive to think that Bitcoin could exceed $160,000 in this cycle. The bear market has poisoned many people's minds, and this damage is beginning to manifest on my timeline, forming tweets with poor reasoning. While this may mark a local peak, it does not change my view. I am not afraid of being wrong, although if I didn’t believe this, I wouldn’t write this article. Even if the public and private markets are as hot as they are now, they will only continue to diverge from the realm of realistic expectations, leaving all non-believers behind. If there is a timeline where the supercycle theory of Jupiter is proven true, if I say I don’t believe we are living in it, then I am lying.

Disclaimer: The materials provided here represent my views only and are for informational purposes only and should not be considered investment advice. This is not a recommendation for any specific security, strategy, or investment product, nor is it an offer or solicitation to buy any specific security, strategy, or investment product.