Editor's note: Don't miss out on this rare setup... For investors who haven't explored the cryptocurrency markets, the complexity of cryptos can often scare away even the most experienced traders. But Crypto Capital analyst Stephen Wooldridge II says it pays to learn how to navigate this unique asset class. That's because opportunities in this space are heating up right now... According to Stephen, cryptos could be on the cusp of a historic bull market. And the more you understand the technology that powers this market, the easier it will be to secure massive profits. In today's Masters Series, adapted from the October 31, 2023 Digest, Stephen details how the approval of spot bitcoin ETFs impacted the crypto market... talks about what to expect for cryptos this year... and reveals how you can prepare for the upcoming bitcoin halving...
Why You Should Be Optimistic About the Crypto Space By Stephen Wooldridge II, analyst, Crypto Capital On the surface, I believe the recent crypto rally is directly tied to the approval of 11 bitcoin (BTC) exchange-traded funds ("ETF") by the U.S. Securities and Exchange Commission ("SEC") earlier this year. And I'm not alone. Some analysts thought that an accidental tweet on X, previously known as Twitter, sparked this run higher back in October... The tweet came from Cointelegraph – a relatively trusted source in the crypto community. It claimed that the SEC had approved BlackRock's request for launching a bitcoin ETF. The famously volatile bitcoin market price broke out of four days of remarkable stability on October 16 following this report. It jumped 5% on the day of the announcement. That same day, the media outlet publicly apologized for what it said was a "false" post derived from misinformation. But the market's rally held up through the backtrack. It even climbed in the days that followed. And as I'll explain, that was a tell about where the crypto markets were headed... A rally over this news makes a lot of sense in hindsight... A regulated bitcoin ETF helps bring more crypto exposure to a wider range of investors who don't want to trade in BTC directly. Against the backdrop of 12 months filled with regulatory uncertainty surrounding cryptocurrencies in the U.S., and popular centralized exchanges like FTX and BlockFi going bankrupt, that covers a lot of people. But to end the discussion there would be an oversimplification of what's really going on with the crypto markets. In truth, this rally is a small part of a slow climb that was building throughout 2023. The crypto market at large is recovering from a deep bear market that lasted throughout 2022. We've been in an accumulation phase since January 2023. And in October, bitcoin broke past a key technical resistance level at $30,000 that had lasted since 2022's drawdown... so the future is as bright as it has been in quite a while. This may sound like a bold claim, but it's not a stretch to say that we may very well be on the cusp of a historic bull market in cryptos unlike anything we've ever seen. A number of factors support this optimistic prediction... SEC Chair Gary Gensler indirectly made a bullish case for crypto's future value after his speech at the Securities Enforcement Forum event in Washington, D.C. in October. The speech itself presented a grim view of crypto investing, which is "rife with noncompliance," according to Gensler. But when fielding questions afterward, he said that the U.S. capital market is valued at upward of $110 trillion on its own, whereas the total crypto market cap was valued at just above $1 trillion at the time. Thus, cryptos made up less than 1% of U.S. capital markets. (Since then, the total crypto market cap has risen to $2.6 trillion, just over 2% of U.S. capital markets.) Gensler used this to indicate that people are talking about cryptos too much when they're still such a small sector of the overall market. But we look at it a different way... Considering the value of blockchain – the ledger that tracks a crypto's transactions – this ultimately means that the prices we've seen thus far are wildly undervalued, and we're still very early in the development of cryptocurrencies. And if that idea doesn't excite you, maybe this will... Bitcoin may have jumped from $27,000 to $29,000 on October 16, but since then, it hit a new all-time high of $73,835 on March 14. Anyone expecting a significant pullback has been on the wrong side of the trade... BTC has offered little indication that its price could be dropping to pre-rally levels anytime soon. One of the biggest reasons to expect a surge of value throughout the rest of 2024 comes from a technology built into bitcoin's code since its origin. You see, bitcoin is due for another "halving" next week. Every four years, bitcoin miners start receiving half of their previous rewards for processing bitcoin transactions. Halvings significantly slow down bitcoin's inflation rates. And historically speaking, these halvings are always followed by a substantial rally. The most recent halving took place in May 2020, when BTC was priced around $8,600. It was followed by a significant bull run that left BTC priced at $56,900 in May 2021. That's an increase of 561% in one year. And the previous halving, in July 2016, saw gains of 287% in the same time frame. Because of bitcoin's dominance in the crypto markets, currently making up about 50% of the total crypto market cap, BTC's halvings are a good predictor of an incoming bull run. But alternative cryptocurrencies, coined "altcoins," often see the biggest gains. For example, our publication Crypto Capital closed out five separate 1,000%-plus gains in 2021, near the peak of the last BTC halving bull run. But even without the "halving indicator," there are other unseen factors influencing the markets that are setting it up for a successful run over the next year... Back in October, Arthur Hayes, co-founder of the centralized exchange BitMEX, offered a view from left field concerning the then-recent rally that made a lot of sense. He claimed the rally wasn't from the looming bitcoin ETF approval, but instead was an unexpected consequence of the ongoing wars in Ukraine and Israel. As the U.S. beefs up its military spending, which could rapidly increase if war breaks out in more corners of the globe, U.S. inflation will be gearing up to hit an all-time high. And scarce commodities, like precious metals and cryptos, can act as a hedge against that. It's notable that bitcoin's recent rally has coincided with a rally in gold, too. Yet beyond crypto's monetary value, which we value against U.S. dollars that are affected by inflation, utility is what really sets cryptos apart as an asset class. Cryptocurrencies and the blockchain technology they're built on have opened up a new world of decentralized, community-run financial opportunities, coined decentralized finance ("DeFi"). This category includes self-repaying loans, loans that don't require a middleman, real-world assets like real estate and precious metals that can exist in a digital and borderless form, yield-bearing vaults on a variety of assets, and new innovations that folks haven't even conceived yet. In short, cryptos (still) will change the way we do things... They'll touch things like buying concert tickets to financing homes, without us even realizing that we're using them. They will streamline complicated processes, put the power back in the hands of people, cut out unnecessary middlemen, and define the way we interact with the financial landscape of a globally connected world. That's the real value cryptocurrencies bring. And we believe crypto's inherent usefulness will be valued much higher than it is today by individual investors and institutions. What's more, the users of DeFi protocols both benefit from its value and ultimately control its development. But in the meantime, we'll be keeping a close eye on cryptos. And we'll prepare for the next halving as it approaches. Good investing, Stephen Wooldridge II
Editor's note: The upcoming halving on April 19 is setting the stage for a huge moneymaking opportunity for investors who are paying attention. Crypto Capital editor Eric Wade believes this event will be the biggest day in crypto history. So, he's hosting an online presentation on Tuesday, April 9, at 10 a.m. Eastern time to discuss how you can take advantage of this once-in-four-years opportunity. Learn more here... | 
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