The latest research report by Coinbase Research and Glassnode highlights the similarities between the current state of the crypto market and the period from 2018 to 2022. The report indicates that Bitcoin (BTC) and Ethereum (ETH) are following a pattern similar to previous years, during which their prices surged significantly.
According to the research, both Bitcoin and Ethereum experienced substantial price increases in the past, with Bitcoin surging by 500% and Ethereum by 1,000%. These numbers suggest a cyclical nature in the crypto market and draw parallels to the ongoing market cycle.
Analysts point out various cyclicality metrics, such as net unrealized profit/loss and supply in profit, which reflect past trends. These metrics indicate that the current state of the crypto markets does not exhibit the same euphoric conditions seen during the peak of 2023. However, it suggests that there is still potential for further surges in the market.
While acknowledging the potential positive impact of the upcoming Bitcoin halving, Coinbase Research remains cautious. The research paper mentions a lack of robust supporting evidence and characterizes the relationship between the halving and market performance as speculative. With only three halving events historically, a fully established pattern is yet to emerge, especially considering the influence of global liquidity measures on past events.
Based on current mining rates, the Bitcoin halving is projected to occur in April 2024. This event will reduce the block reward from 6.25 to 3.125 BTC. The upcoming halving is highly anticipated by the crypto community, as it has historically impacted market dynamics. However, its precise effects on price and performance remain uncertain.
In 2023, Ethereum’s price experienced a surge of over 90%. This increase was attributed to factors such as the success of the Shapella upgrade and the potential approval of spot crypto exchange-traded funds (ETFs). These developments encouraged market participants and contributed to the rise in Ethereum’s value.
Looking ahead, analysts are placing their attention on the upcoming Ethereum upgrade named Cancun. The goal of this upgrade is to enhance scalability and security, making layer-2 transactions as cost-effective as possible. The successful implementation of Cancun could potentially lead to a significant increase in the number of transactions processed on the Ethereum network, further boosting its value.
Coinbase’s analysis identifies that Bitcoin and Ethereum have undergone two complete cycles, encompassing both bull and bear markets. The ongoing cycle, initiated in 2022, closely mirrors the patterns observed in the preceding cycles. This observation reinforces the notion of cyclical behavior in the crypto market and provides insight into potential future trends.
The crypto market, particularly Bitcoin and Ethereum, appears to be following a pattern similar to previous years. The research by Coinbase Research and Glassnode highlights the cyclical nature of these cryptocurrencies and their potential for further price increases. However, caution is advised due to the speculative nature of certain relationships, such as the correlation between the Bitcoin halving and market performance. As the market evolves, analysts will continue to monitor upcoming events and upgrades, such as the Cancun upgrade for Ethereum, to assess their impact on the overall market trajectory.