Despite the air of despondency that has blanketed the crypto space for the last several months, there has not so far been anything this cycle to signal a major departure from previous trends.
Up to now, bitcoin, dragging the altcoin rabble in its wake as always, has been following more-or-less the same ups and downs it has traced out in past cycles and which mark the typical shifts in psychology that drive bullish and bearish periods.
In fact, occasional claims that this time is different, are themselves to be expected as part of the pattern, demonstrating that this time is, as things stand, the same.
This is not to say that external factors, monetary or political, are the same as before. You can’t stand in the same river twice. But, those external currents are carrying bitcoin and crypto around familiar channels, and are balanced, perhaps, by the knowable behavioral shifts that provide energy to markets.
Looking ahead from here, we can speculate on where the dynamism will come from to drive the next crypto bull run, which means first reflecting on what drove the previous bull run.
Key Drivers Last Time
The 2020/21 crypto upturn coincided with a period, as governments departed wildly from orthodox pandemic response strategies, of extreme stimulus packages. With cash at hand, populations ordered to stay at home, and a surreal sense that normalcy had been indefinitely suspended, casual investors became prone to act incautiously, and the result was money pouring into Bitcoin and the rest of the crypto space, including NFTs and meme coins such as Shiba Inu.
Essentially, there was a free-for-all, and valuations bubbled through the roof. Not all of this was simply optimistic recklessness, though. In fact, it made sense to take advantage of what was occurring, and if a purported quality of bitcoin is that it can be used to hedge against currency debasement and inflation, then it worked, soaring in price when cash was cheap.
Bitcoin’s subsequent crash is not evidence that doesn’t function as a hedge, but rather that it reacts rapidly but coherently to changes in the wider monetary environment, including both relaxation and tightening.
Speculation around NFTs and, later in 2021, metaverse development were also drivers of interest. Ethereum in particular, positioned to…
