Bitcoin, the leading cryptocurrency by market capitalization, has been in a consolidation phase for the past few months, trading between $30,000 and $40,000. However, some crypto experts believe that the next bull run is close and that Bitcoin could reach new highs soon. One of them is Kevin Kelly, the co-founder of Delphi Digital, a research and consulting firm focused on digital assets.
Bitcoin’s Four-Year Cycle
Kelly shared his analysis on Twitter, where he explained why he thinks Bitcoin follows a consistent four-year cycle that is driven by its halving events. A halving event occurs every 210,000 blocks, or roughly every four years, and reduces the amount of new bitcoins created per block by half. This creates a supply shock that increases the scarcity and value of Bitcoin.
Kelly pointed out that Bitcoin has experienced three halving events so far, in 2012, 2016, and 2020. Each time, the price of Bitcoin reached a new all-time high within 12 to 18 months after the halving. For example, after the first halving in November 2012, Bitcoin peaked at around $1,000 in December 2013. After the second halving in July 2016, Bitcoin reached nearly $20,000 in December 2017. And after the third halving in May 2020, Bitcoin soared to over $60,000 in April 2021.
According to Kelly, this pattern suggests that Bitcoin is still in the early stages of its current cycle and that it could surpass its previous peak by the end of this year or early next year. He also noted that the current cycle is different from the previous ones in terms of institutional adoption, regulatory clarity, and innovation in the crypto space.
Institutional Adoption and Regulatory Clarity
One of the main factors that Kelly believes will fuel Bitcoin’s next bull run is the growing interest and involvement of institutional investors and corporations in the crypto market. He cited several examples of prominent institutions that have embraced Bitcoin as a store of value, a hedge against inflation, or a payment option. Some of these include MicroStrategy, Tesla, Square, PayPal, and Visa.
Kelly also argued that the regulatory environment for crypto has improved significantly over the past year, as more countries and jurisdictions have recognized and legitimized the potential of digital assets. He mentioned some of the positive developments that have occurred recently, such as El Salvador becoming the first country to adopt Bitcoin as legal tender, Germany allowing institutional funds to invest up to 20% of their assets in crypto, and Switzerland granting a banking license to a crypto firm.
Kelly acknowledged that there are still some challenges and uncertainties regarding crypto regulation, especially in the US, where the Securities and Exchange Commission (SEC) has been slow to approve a Bitcoin exchange-traded fund (ETF) and has initiated several lawsuits against crypto companies. However, he expressed his optimism that these issues will be resolved over time and that regulators will eventually adopt a more favorable and supportive stance towards crypto.
Innovation in the Crypto Space
Another factor that Kelly highlighted as a catalyst for Bitcoin’s next bull run is the innovation and development that is happening in the crypto space, especially in the areas of decentralized finance (DeFi) and non-fungible tokens (NFTs). DeFi is a term that refers to various applications and protocols that aim to provide financial services without intermediaries, such as lending, borrowing, trading, insurance, and asset management. NFTs are unique digital tokens that represent ownership of various forms of digital or physical assets, such as art, music, videos, games, collectibles, and real estate.
Kelly explained that DeFi and NFTs are creating new use cases and value propositions for crypto users and investors, as well as attracting new participants and capital to the crypto ecosystem. He also noted that these sectors are driving innovation and competition among various blockchain platforms and networks, such as Ethereum, Binance Smart Chain, Solana, Cardano, and Polygon. He added that these platforms are also working on improving their scalability, security, usability, and interoperability to meet the growing demand and expectations of their users.
Kelly concluded his analysis by stating that he is bullish on Bitcoin and crypto in general because he believes they represent a paradigm shift in finance and technology. He said that he expects Bitcoin to continue its four-year cycle pattern and reach new highs in the near future. He also said that he anticipates more innovation and adoption in the crypto space as more people realize its potential and benefits.