Experts are watching changes in the crypto market and the potential beginning of a new supercycle. This article examines key factors that could influence this process.
Dollar Weakness and Crypto ETF Growth
One catalyst for the start of a supercycle could be the decline of the US Dollar Index (DXY) below 95, a level not seen since November 2021. Dollar weakness against other currencies may signal discomfort with the US fiscal situation and increase investments in alternative assets, including cryptocurrencies.
The growth of the exchange-traded fund (ETF) market is also significant. Despite recent milestones, the capital in crypto-related ETFs stands at only $190 billion, which is minuscule compared to traditional assets. For instance, the three largest S&P 500 ETFs manage a total of $2 trillion in assets.
Additionally, the plans for a strategic Bitcoin reserve remain vague, but renewed interest could shift market sentiment.
Retail Investor Interest
Retail investor participation plays a crucial role in triggering a supercycle. Search volumes for terms like 'buy Bitcoin' and 'buy crypto' have remained low, while Coinbase and Robinhood apps have fallen in US App Store rankings.
While institutional investment leads the current cycle, retail investors could drive future growth. It is important to watch for a resurgence in interest towards altcoins and new trends in the crypto industry.
Speculative Scenarios and Forecasts
Current scenarios remain speculative and hinge on macroeconomic and geopolitical developments, including the US Federal Reserve's ability to avoid a recession. If the crypto market meets conditions, it is expected that capitalization could exceed $13.2 trillion, representing a 400% increase compared to the November 2021 peak.
The crypto market is currently in an uncertain situation, but economic and social factors may create conditions for the onset of a new supercycle. It is essential to closely monitor the developments.
