A new report from Goldman Sachs-backed crypto trading giant Circle says Bitcoin appears to be entering its third long-term market cycle, one that will be buoyed by geopolitical uncertainty and a greater level of institutional involvement.
Circle’s extensive “Crypto Retrospective” report analyzes developments in the space across the first half of 2019.
“Bitcoin’s price rally in 1H 2019 suggests the starting of a new market cycle (1st cycle was 2013-2015, 2nd cycle was 2016-2018) and in a much more mature position relative to the last cycle. High quality assets have seen differentiated performance YTD and do not see the entrance of new, low quality assets that was pervasive in 2017.”
Circle predicts the new cycle will have different investor genetics than previous Bitcoin bull runs.
“While the prior two cycles were driven mostly by retail investors, the slower cadence of institutional investors and market participants should primarily comprise much of the 3rd, longer cycle.”
The company also says geopolitical and financial uncertainties are likely driving people towards safe-haven assets. The report notes that Bitcoin reached an all-time-high market capitalized realization of $94.4 billion on July 21, as well as surpassing 60% in market capitalization dominance – indicating the bull run is benefiting BTC more than altcoins.
Circle’s analysis falls in line with a recent report from Grayscale Investments calling Bitcoin a potential hedge against global liquidity crises.
Grayscale, which has $2.5 billion in digital assets under management as of July 26, highlights five recent macroeconomic developments where Bitcoin outperformed traditional currencies as well as gold in the face of potential and/or realized liquidity crises.
Examples include Greece’s 2015 bank shutdown and near-departure from the European Union; China’s structural devaluation of the renminbi in 2015 and 2016; 2016’s Brexit; rising geopolitical risk in the United States in late 2016; and the escalation of US and China trade tensions last month.