People are constantly trying to size up where we are. This is done by looking at technological trends, market cycles, liquidity moves, and even astrology.
The world of cryptocurrency is no different. Since we are dealing with a heavy focus upon markets, people are wondering when "price go up".
It is common to reference different cycles based upon the seasons of the year. We know Winter is cold and dreary. It is a dead time. Spring is when things start to sprout, there are some signs of life. Summer is the take off period while Fall is the reverse of Spring.
So where are we in the crypto cycle and what could stimulate an explosion?
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Forces Aligning
There is no doubt that Winter ended. We are far from the last of the last bear market. The price of Bitcoin moves up in a powerful way before suffering a significant pullback. This is not uncommon.
At this point, we have a number of forces that could align.
The first is the fact we are in election season. Many are in the process with the big one, the US race, coming up in November. Why is this important?
Quite simply, it becomes giveaway season.
The modern politician is nothing more than Santa Claus, regardless of party. Campaigns are promises of who can give away the most. Handouts are the currency that is used, producing ever increasing deficits. This is true regardless of which party takes control.
We are also coinciding with the wavering of central banks. A few have already started to cut rates. The Fed is now on the clock with many trying to project when they will join[the party.
This has an impact upon liquidity, even if it is perceived. Many economists will claim that it is an increase in liquidity for the general economy which is untrue. Central bank can only directly affect the money supply via the printing of banknotes. That is the only legal tender it deals in.
However, as with most things from the Fed, it is a propaganda organization. When it states something, the market can pick up the ball and run with it. Hence, the result can be more liquidity as market participants jump in, often trying to front run the central bank.
Another piece is we are seeing some signs of economic growth. This is not widespread and it certainly isn't powerful. If that were the case, there would be no move by the central banks.
Instead, they are seeing some optimism amidst the weakness. Unfortunately, like real estate, it is a varied picture. Some are starting to see improvement while others are heading for more trouble.
The result of this is some have earning enhanced. This helps the markets especially if it is from some of the larger players. Amazon and Apple hitting it out of the park grabs headlines. Time Warner having a poor quarter barely gets noticed.
The Game
We have to realize there is a game being played.
Underlying all of this is the business cycle. While many deny that it still operates, it is easy to see where it has impacts. There are times of expansion along with ones of contraction. For much of the world, we have seen contraction in many areas.
There is a currency issue being played. The Chinese and Japanese both see their currencies being destroyed against the dollar. Japan went over 160 on the yen. This is a problem. It is also where we see a lot of intervention.
Globally, there is a dollar shortage. But China and Japan need dollars. So how do they get them?
This is where the game starts to emerge. A lot of coordination is going to occur to stimulate things by moving the currencies that foster more growth. This means bring the yen and yuan down. Yellen is out there making the rounds for a reason.
Notice how none of this has to do with "fundamentals". Markets, for the most part, could care less. With crypto, the number of wallets, applications, nor number of users is of no consequence.
Certainly, the media will point to the issuance of the Ethereum ETF. Or they will point to the development of something it deems spectacular. It might be Trump or some other politician talking about it.
Whatever their reasoning, it is a sideshow. The real action is what is taking place globally. Predictably, central banks are going to really push to move things in a higher direction. This will benefit crypto since it is going to be a coordinated effort.
A lot of what we are dealing with boils down to confidence and what people think. If enough people believe the central banks are providing liquidity and it somehow gets into their wallet, they will act accordingly.
Of course, crypto is volatile and this is going to be enhanced during the election cycle. There will be a lot of movement based upon what the candidates say or do, much of it noise. After the election, regardless of who wins, if the other factors are in play, things will take off.
My Forecast
The way things are aligning, I forecast for a major crypto run from the end of 2024 period into 2026. This will be a bull run that will set all time highs in many crypto related categories.
We might be seeing some signs in the next month or so (Ethereum ETF going live?) that helps to feed into this. The narrative from the Fed already changed, with more neutral stance. When does that move to dovish?
Then we have Trump. He is out there seeking to become the "Crypto President". It is ironic how this became a campaign issue. Will the majority of the Democrats, including Biden, take a softer stance? If that happens, we will have some talking points that could be optimistic about it.
This is ultimately what drives market. Nobody cares about the number of wallets or steady growth. For things to boom, it takes macro forces aligning with the actions of the major players in the world. That seems to be happening.
It is also a way that crypto can benefit.