Bitcoin is about to enter a key stage after halving, will the bull market cycle repeat itself?

Bitcoin is currently at a critical juncture, with investors watching to see if historical trends will repeat. It has been nearly six months since the fourth Bitcoin halving, and Hashdex Research reveals that Bitcoin is now approaching a crucial stage where, based on previous cycles, prices may start to rise after a long consolidation period.

Will history repeat itself?

There are many key factors influencing this potential market shift. According to a report from asset management company Hashdex's research team, this includes recent major central bank rate cuts, such as the 50 basis point cut by the Federal Reserve in mid-September, monetary easing and stimulus measures in China, and the upcoming U.S. presidential election.

These factors could create a favorable environment for a potential surge, similar to previous halving cycles where prices surged significantly in the months following the event.

At the end of the third quarter, the volatility in the crypto market was relatively stable, with Bitcoin's volatility below 50%, and Ethereum and Solana coins at similar levels. These lower volatility levels indicate maturity in the industry, with only a temporary spike in volatility caused by the unwinding of yen carry trades in early August, affecting not just Bitcoin but all major asset classes globally.

As the fourth quarter of 2024 begins, there are reasons to expect an increase in overall cryptocurrency volatility, especially as prices start to show positive movements. Hashdex Research points out that Bitcoin investors continue to accumulate assets; Bitcoin prices fluctuated between $54,000 and $69,000 in the third quarter. By the end of the year, Bitcoin's dominance strengthened, accounting for 54% of the digital asset market.

Bitcoin's Recovery So Far

Bitcoin started the third quarter of 2024 positively, rising by 5.3% in July, driven by increasing optimism surrounding the potential approval of an Ethereum ETF and renewed confidence in Trump's election prospects, who supports cryptocurrencies.

However, this upward momentum was hit in August when the Bank of Japan unexpectedly raised interest rates, leading to widespread selling across major asset classes. This ultimately caused Bitcoin to drop by 10%.

September also began on a bearish note as confidence in Trump's victory waned, and U.S. employment data indicated a possible recession, weakening market sentiment. However, the situation changed in mid-September, sparking investor optimism and helping Bitcoin recover. The cryptocurrency ended the month with an 8% gain, resulting in a cumulative total return of 2.5% for the third quarter.

In the past seven days, Bitcoin has appreciated by over 5%, currently trading above $65,650 When it comes to spot ETFs, one of the most noteworthy developments is the acceptance of Bitcoin by the global investment management giant BlackRock, which is crucial in the cryptocurrency field. In January of this year, the company launched a spot Bitcoin ETF, pushing the price of this cryptocurrency to a historic high. In July, it repeated this move by launching a spot Ethereum ETF to expand its digital asset portfolio. Although compared to Bitcoin, the latter only attracted moderate inflows of funds, the company still considers it to have achieved moderate success.

Bitcoin = Gold?

In response to this, BlackRock's CEO Larry Fink stated that Bitcoin is an asset class and compared its investment potential to that of gold. He emphasized in a conference call, "We believe that Bitcoin itself is an asset class. It is an alternative to other commodities like gold. BlackRock is discussing potential allocations with global institutions."

Fink also emphasized that the future success of digital assets will not only depend on regulation. He claimed that liquidity and transparency will be more critical in determining market evolution. The CEO compared the current state of virtual assets to the $11 trillion mortgage market. He pointed out that cryptocurrencies are still in their early stages, but with better data and analysis becoming available, they may experience similar growth.

He said, "We've seen this before in the mortgage and high-yield markets. It starts slow, but with the introduction of better analysis and data, the market gains broader acceptance."

Fink also discussed the digitization of national currencies. He specifically mentioned the potential of a digital dollar and the role it could play. He highlighted successful cases of India and Brazil adopting this technology.

Furthermore, Fink believes that the integration of artificial intelligence and improved data analysis could drive the expansion of the digital asset market and broader acceptance.

His comments come at a time when inflows into spot Bitcoin ETFs have surged. October 14 was one of the strongest days for these financial products since they were listed in January. Data from Farside Investors shows that on that day alone, spot Bitcoin ETFs attracted $555.9 million in new inflows. BlackRock's own IBIT ETF attracted $79.5 million in inflows, ranking behind Fidelity's FBTC and Bitwise's BITB, with the former attracting $239.3 million and the latter attracting $101.1 million in inflows