5 Reasons to Stay Bullish on Crypto

If you haven’t noticed, market sentiment has been... pretty bad lately.

Bitcoin is down significantly over the past month, a number of altcoins are down much worse, leaving many across Crypto Twitter to share messages of doom and gloom. Yet, despite the current downturn, historical trends and underlying movements suggest we are far from the end of this cycle. 

Today, we're digging into hope. Here are five reasons not to lose faith in this cycle and look beyond the market's current turmoil.

1️⃣ Drawdowns = Normal

For veterans of the cryptocurrency markets, volatility is par for the course.

As Bitcoin's fourth 20% correction within the last 12 months, the current pullback proves nothing unusual historically. Surviving multiple drawdowns — ranging from mild 5-10% dips to severe 40-70% plunges — and not getting shaken out is a typical experience during a bull market. 

Corrections are not just common; they're expected.

2️⃣ Historic Timing

At this point, the Bitcoin halving's importance is not so much in its impact on supply as what it implies for the next 12-18 months.

Analysis reveals that market bottoms typically occur about 1.3 years before a halving, with peaks following roughly 1.3 years after, around 480 days.

These drops can be viewed as a regular pitstop on the road to new all-time highs, aligned with the broader cyclical rhythm of Bitcoin's continued ascent.

3️⃣ Institution Long-Term Plays

Now, consider the conviction investors require to lock significant capital into tokens with a multi-year horizon. 

Recently, a16z acquired about $90M of Optimism's OP token with a two-year vesting period, showing a strong conviction in the Superchain’s potential. Similarly, institutional funds bought $100M of locked SOL during the FTX estate's sale, with terms locking these tokens for a four-year vesting period. This second round of sales, the first seeing $1.7B worth of SOL sold earlier in March, comes at a measly 15% discount ($95-110) to current market prices (~$130) — adding to the significance of the four-year vesting period. 

These long-term purchases speak to a deep-set conviction of where the market will continue to trend over the coming years.

4️⃣ Fear & Greed Signals

As a young market that turns on narratives first and foremost, emotion plays a pivotal role in crypto.

By examining the Fear & Greed Index, much can be discerned about where the market is headed. On the index, 0 equals max fear, while 100 equals max greed. When the index hit 90 last month, the decline we are experiencing today started. It now sits at ~50, neutral territory that historically signals a bottom is near. On January 24, the index read 48. The following month and a half saw Bitcoin rally from $39K to $73K. A similar pattern occurred last October. The index hit 44, and BTC climbed from ~$26K to $40K by the first week of December.

What did Warren Buffett say? Be fearful when others are greedy, and be greedy when others are fearful?

5️⃣ Government Hostility

Ultimately, the war the U.S. government wages against crypto signals one thing — crypto remains a tool for securing digital rights and freedoms. 

At its core, Bitcoin and crypto were created to develop a system for true financial independence. With ~25% of the world unbanked and the rest operating on antiquated rails, blockchains offer a solution not only to expedite and connect the whole world’s financial systems, but also to truly own their wealth and access it from anywhere in the world. The recent crackdowns highlight this power, the old world grappling with it, and demonstrate crypto’s ability to preserve financial independence, property ownership, and other fundamental rights. 

As we move deeper into a fully digital age, the case for crypto enabling digital autonomy only grows more potent, extending beyond finance to also include self-custody of your data and online identity.

🙏Hope Ahead

Despite the current market sentiment, there remains a compelling case for optimism about the market. 

The resilience of Bitcoin through its continuous drawdowns, the historical rhythms around halvings, institutions going long, market sentiment indications, and the role crypto plays in preserving digital rights clearly demonstrate reasons to remain bullish. 

As these cycles play out, it may be wise to expect more corrections going forward but to view them as opportunities, not drawbacks.