Bitcoin Super Cycle
- increased value of the network as adoption grows (Metcalfe’s law),
- increased scarcity due to the halving and
- increased institutional adoption.
This supercycle will, theoretically, see Bitcoin run up to new all-time highs, from which there will be no further downside, as there will be enough adoption and institutional support to continue to prop up the price.
- institutions are only one factor here.
- the market value of a commodity is not derived from centralized entities but rather from decentralized independent actors perceiving value in the commodity...investing in Bitcoin and other cryptocurrencies is akin to emerging markets investing at this stage in the adoption cycle.
- Bitcoin itself needs to have perceived value from market participants, or it will not have the staying power.
The Minsky Moment
In economics, the very height of the boom cycle, where overvaluation is at its apex just before the bust, is called the “Minsky moment.”
In 1995, Netscape had a successful initial public offering, backed by institutions like Morgan Stanley, which pushed the stock price from $14 to $28 — valuing the not-yet profitable 16-month-old company at over $1 billion.
The Nasdaq Stock Market rose dramatically between 1995 and 2000, peaking in March 2000 at 5,048.62 before falling 76.81% to 1,139.90 in October 2002.
Without customers and the actual usage of these firms’ services in the market, there was nothing to keep the overvaluation afloat.
As the world continues with the trend of dedollarization, the flight to safety could be Bitcoin.
The drops in credit ratings signal decreasing confidence in the U.S. and, by extension, the standing of the U.S. dollar being the central unit of account for global settlement.
If hyperinflation starts to rear its head in the U.S., it is possible that alternatives will be used instead of holding onto cash.
It is yet unknown whether America’s economic and sociopolitical climate will nudge people to adopt Bitcoin as a medium of exchange, a store of wealth or a hedge against further dollar inflationary pressure.
"a loss of confidence in fiat currencies, increased banking oversight and the collapse of exchanges like FTX “strengthen the Bitcoin narrative.” ~ Julian Liniger, CEO of Bitcoin-only exchange Relai
What are the probabilities of a 2024 Bitcoin supercycle?
The Bitcoin supercycle is likely not upon the world for this continued adoption cycle.
There is simply too much speculation over adoption and daily usage happening globally for the asset to have no or just a soft correction to cushion the fall once the Minsky moment pops the bubble.
2028, on the other hand, may be a different story altogether.
https://cointelegraph.com/news/bitcoin-supercycle-2024-investment-trading
