TL;DR How far in the bull market are we? Drawing from a range of both macroeconomic and on-chain indicators, we can conclude that we are smack in the middle of the crypto bull market. Top signals haven’t flashed yet: there seems to be fuel left in the tank.
Chances are you’ve noticed it: we’re in a bull market 🙂 BTC is up more than 300% since the 2022 bottom. Alts like Solana are up to multitudes of that. Does this mean it’s time to consider taking profits (never a bad idea), or is there more in the tank? To answer this question, we’ll zoom out from the big macroeconomic picture to the crypto market-specific situation.
The Bigger Economic Picture
We’re not just in a crypto bull market but also a bull market for stocks. While these assets are not totally correlated, crypto is influenced by macro conditions. So let’s look at our neighbors and try to assess how far are we in?
Fidelity’s Jurrien Timmer has looked at historical stock bull markets and averaged the percentage gains and duration.
He concludes:
Over the past 100 years, the median bull market has produced a gain of 90% spanning around 30 months. By that measure there should be some life left for this cycle. [..] If 12:00 is the start of the cycle, compared to the longest cycles in history, it’s only around 3 pm right now. Based on the average cycle, it’s 6 pm.
Takeaway: we could be roughly halfway through the current stock market bull market, pointing at a top around the summer of 2025.
Liquidity on the Rise
For crypto prices to go up and keep going up, people and institutions need money floating around. In financial jargon: liquidity.
Torsten Sløk, head economist of Apollo, measures liquidity by adding up bank reserves and money market assets.
The Apollo chart shows that there is currently record-high liquidity waiting to push stock prices higher. Once the Fed starts lowering interest rates – probably later this year – some of the $6 trillion in money market funds is likely to find its way into stocks and crypto.
Takeaway: liquidity conditions point to enough fuel for a continuation of the bull market.
Catalyst: ETF Flows
There’s the flood of money across the pond, but for a sustained bull market crypto also needs floodgates. The Bitcoin ETF is such a floodgate. Since the Bitcoin spot ETFs launched in early January 2024, it has surprised even bullish-leaning analysts how successful they were.
Here’s a chart from Grayscale, based on Glassnode data, showing how much the cumulative ETF inflows and the BTC price have been correlated. The question of course remains if the inflows will keep coming. Considering that it takes months for financial advisors to even be technically able to start selling these ETFs to their clients, we can expect further net inflows in the coming year.
Takeaway: the ETFs will likely keep putting upward pressure on the BTC price.
On-chain Indicators
Bitcoin Dominance
Historically, the beginning of crypto bull markets has often been marked by a surge in Bitcoin’s “dominance,” a measure of Bitcoin’s market value relative to the total cryptocurrency market.
Why does Bitcoin go up first? It’s partly because it’s the least risky crypto asset and whenever global markets shift their risk appetite from conservative to daring, BTC is the first among…
Erik started as a freelance writer around the time Satoshi was brewing on the whitepaper.
As a crypto investor, he is class of 2020. More of a holder than a trader, but never shy to experiment with new protocols.
