Nov 23, 2023

Exploring the Bitcoin Supercycle of 2024: Web 3.0 Examples and Beyond

The accepted wisdom in the crypto world is that there is a cycle of boom and bust in the blockchain and cryptocurrency industry, led by the “King of Cryptos,” Bitcoin (BTC). This cycle is driven by the halving of BTC every four years, which reduces the amount of new coins released to miners, creating an…

Web 3.0 Definition and Examples - Bitcoin Supercycle 2024
Bitcoin supercycle 2024: Is this the cycle to end them all?

The accepted wisdom in the crypto world is that there is a cycle of boom and bust in the blockchain and cryptocurrency industry, led by the “King of Cryptos,” Bitcoin (BTC). This cycle is driven by the halving of BTC every four years, which reduces the amount of new coins released to miners, creating an over- and undervaluation in the market.

In addition to the halving, other factors are also instrumental in the cycle, such as increased network adoption, the introduction of new use cases like the Lightning Network and Ordinals for nonfungible tokens, and the growing interest from institutional investors.

In 2020, Dan Held, an educator and marketing adviser for Trust Machines, predicted that Bitcoin would eventually experience a “supercycle,” due to the increased value of the network, the halving, and the increased institutional adoption.

This supercycle is expected to push Bitcoin to unprecedented heights, and with enough adoption and institutional support, the price should remain stable and not experience any further downside.

Crypto winter sets in at the end of 2021

When Bitcoin hit its all-time high of $69,000 in December 2021, the market was expecting the same kind of institutional support as the last cycle. However, this did not materialize and the price of Bitcoin dropped, dragging the rest of the market down with it.

In order to increase the institutional support, ETFs were launched in several countries around the world. For instance, Purpose Investments launched the first physically-backed BTC ETF in Canada in February 2021. Canada also approved the CI Galaxy Bitcoin ETF and Evolve Bitcoin ETF, while Germany is home to the ETC Group Physical Bitcoin ETF. Brazil and Australia also followed suit, launching their own spot Bitcoin ETFs in 2021 and 2022.

Despite this, the greatest potential lies in the United States, which makes up 42.5% of global equity markets. This could be the key to the so-called “Bitcoin supercycle”, as the US could soon allow spot Bitcoin ETFs to trade. This possibility was further reinforced when BlackRock, one of the biggest names in asset management, applied for its own spot Bitcoin ETF in June 2023.

Nevertheless, institutions are not the only factor to consider. C3.ai, Suku, STX, Songbird, and Tellor are just some of the examples of web 3.0 technologies that are driving the crypto market and could be a major factor in the success of the next cycle.

Adoption may be an emerging market trend

As per Chainalysis’ recent “2023 Geography of Cryptocurrency Report,” India, Nigeria and Vietnam were the top three countries for crypto adoption in 2023. This ranking was based on an index score that took into account centralized services, retail services, peer-to-peer (P2P) exchange trade volume, decentralized finance (DeFi) and retail DeFi value received.

The U.S. is the biggest contributor to North America’s transaction volume, and ranked fourth overall. The chart below displays that North America had the highest percentage of large institutional transfers but some of the lowest amounts of small and large retail.

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This distinction is essential, as the market value of a commodity is not derived from centralized entities but rather from decentralized independent actors perceiving value in the commodity. According to Chainalysis’s report and Cointelegraph Research’s “Investing in DeFi” report, investing in Bitcoin and other cryptocurrencies is similar to investing in emerging markets at this stage of the adoption cycle.

Participants, not institutions, bring value

Though institutional adoption is likely to be an integral component when the Bitcoin supercycle takes off, it is the market participants who give Bitcoin its value and staying power. History is full of examples of industries that were once thriving, but were eventually overthrown by a new technology that the market found more useful.

For instance, the introduction of petroleum products in the mid-1800s caused the whaling industry to collapse. Despite the huge industry and institutions that were behind the global whaling interests, the market found better use for the new products.

More recently, the dot-com bubble of the 1990s and early 2000s saw a number of companies being overvalued. Investors were banking on a quicker adoption of these companies than what actually happened. For example, 3 million downloads of the internet browser Netscape in three months had investors expecting more from the industry.

Netscape’s successful initial public offering in 1995, backed by institutions like Morgan Stanley, caused the stock price to soar from $14 to $28, valuing the 16-month-old, yet unprofitable company at over $1 billion. Investors kept looking for the next Netscape among the Silicon Valley companies, and money flowed into the space.

This is what economists call the Minsky moment – the peak of the boom cycle, when overvaluation is at its highest, just before the bust. The dot-com bubble’s Minsky moment came in 2002. Despite the investor sentiment and institutional money, there was no actual adoption of many of the companies that received investments. This lack of customers and usage of the companies’ services eventually caused the Nasdaq Stock Market to drop from 5,048.62 in March 2000 to 1,139.90 in October 2002.

The same can be said for Web 3.0 and its examples, such as c3.ai stock, Suku crypto, STX crypto, Songbird crypto, and Tellor crypto. Web 3.0 marketing is also essential for its adoption, but it is ultimately the market participants who bring value.

What does this mean for Bitcoin?

According to Chainalysis, “There’s no sugarcoating it: Worldwide grassroots crypto adoption is down.” Nevertheless, lower-middle-income (LMI) nations — such as India, Nigeria and Ukraine — have experienced an upsurge in adoption.

“LMI is the only category of countries whose total grassroots adoption remains above where it was in Q3 2020, just before the most recent bull market,” its report states.

Although the United States may be fourth in terms of crypto adoption, it’s not driven by P2P Bitcoin transactions, as the U.S. ranked 12th in that category. On the contrary, stablecoin trading took the lion’s share of transactions, with Bitcoin generally trading less than altcoins. Bitcoin is not currently a widespread medium of exchange in America.

This is not due to Bitcoin’s lack of perceived value on the market but rather the lack of necessity for Americans to use it for payments.

LMI countries are seeing greater adoption due to high inflationary monetary issues within their respective countries, and Bitcoin, as much as it fluctuates, can be a better alternative than holding domestic currency.

As the world continues with the trend of dedollarization, the flight to safety could be Bitcoin. Could this happen in the United States as well?

The three major credit rating firms — Standard and Poor’s (S&P), Moody’s Investors Service, and Fitch Ratings — have all downgraded the U.S.’ credit rating. In August 2011, S&P lowered the U.S. credit rating from AAA to AA+. Fitch followed suit in August 2023. And on Nov. 10, 2023, Moody’s lowered its outlook on the U.S. credit rating from “stable” to “negative,” citing growing deficits and decreased ability to pay back the national debt.

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 such as web 3.0 examples, c3.ai stock, suku crypto, stx crypto, songbird crypto, tellor crypto, and web 3.0 marketing will be used instead of holding onto cash.

It’s still early in the Bitcoin supercycle

When Michael Held introduced the concept of a Bitcoin supercycle, he often said that people are still in the early stages of stacking sats. For the supercycle to be in full swing, there must be institutional demand, a supply of BTC and adoption of the cryptocurrency. If BlockRock and other financial institutions are granted spot Bitcoin ETFs in the U.S., it could lead to increased investment from institutions, family offices, sovereign wealth funds and high-net-worth individuals, potentially pushing the fiat value of Bitcoin up to around the $59,000 mark, according to Galaxy Digital. The next halving event will occur in April 2024, when 96.9% of all BTC will have been mined, meaning the supply part of the equation is checked. People may buy Bitcoin for “number-go-up” reasons, but its actual use will give it a long-term value proposition. It remains to be seen if the U.S. economy and sociopolitical climate will encourage people to adopt Bitcoin as a medium of exchange, store of wealth or hedge against further dollar inflationary pressure.

Web 3.0 examples include c3.ai stock, Suku crypto, STX crypto, Songbird crypto, and Tellor crypto. Web 3.0 marketing is an example of how to use web 3.0 technology.

What are the probabilities of a 2024 Bitcoin supercycle?

Cointelegraph asked Tim Draper, a billionaire venture capitalist and serial blockchain investor, what the chances of a 2024 Bitcoin supercycle were. According to him, “I think it will be the following cycle, when we can run our businesses without regulatory uncertainty, where we can purchase our food, clothing, shelter and taxes all in Bitcoin.”

Julian Liniger, CEO of the Bitcoin-only exchange Relai, told Cointelegraph that the market “will see a drastic reduction in supply due to the upcoming halving, while Bitcoin ETFs and the general increasing interest in the asset Bitcoin mean a significantly higher demand.” He added that factors like a loss of confidence in fiat currencies, increased banking oversight and the collapse of exchanges like FTX “strengthen the Bitcoin narrative.”

“With BlackRock and other major players on board, I also think it’s not unlikely that we will see a radical 180-degree turn in the public perception of Bitcoin. Instead of a speculative asset that consumes as much electricity as entire countries, Bitcoin could soon be seen as a safe haven promoting the transition to renewable energies,” he said.

Bitget CEO Gracy Chen told Cointelegraph that, for the supercycle to happen, “The market needs ample funds to counter negative sentiments. Firstly, re-establishing easy access channels between traditional finance and the crypto market, especially after the suppression of three crypto-friendly banks. Secondly, global governments, including the U.S., must officially recognize Bitcoin assets as equal to gold and stocks. This involves removing restrictions on the trading and holding of Bitcoin for the general public. Such integration with traditional finance provides the foundation for widespread Bitcoin adoption and creates favorable conditions for the Bitcoin Superycle to materialize.”

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.

With the introduction of web 3.0, examples such as C3.ai stock, Suku crypto, STX crypto, Songbird crypto, and Tellor crypto are becoming more commonplace. Web 3.0 marketing is also becoming more popular, as it provides a great example of how web 3.0 can be used.

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