Bitcoin (BTC) and Ethereum (ETH) are currently displaying a pattern reminiscent of previous years, during which their prices rose by significant margins, according to a recent research report by Coinbase Research and Glassnode. This observation highlights the cyclicality of the crypto market and draws parallels between the ongoing cycle and the period from 2018 to 2022.
The report emphasizes the use of various cyclicality metrics, such as net unrealized profit/loss and supply in profit, which have mirrored past trends. These metrics suggest that the current state of the crypto markets is not as euphoric as the peak of 2023, indicating the potential for further surges.
Despite acknowledging the potential positive impact of the upcoming Bitcoin halving, Coinbase Research approaches the topic with caution. The report notes a lack of robust supporting evidence and characterizes the relationship between the halving and market performance as somewhat speculative. Historical data is limited, with only three halving events to observe, and previous events were influenced by factors such as global liquidity measures.
The Bitcoin halving, projected to occur in April 2024 based on current mining rates, will reduce the block reward from 6.25 to 3.125 BTC. While this event is eagerly anticipated, its exact impact remains uncertain. The forthcoming halving may influence the market, but its significance is still a topic of debate.
In 2023, the price of Ethereum experienced a surge of over 90%, driven by several factors. The success of the Shapella upgrade and the increasing likelihood of approval for spot crypto ETFs contributed to the increase in ETH value.
Looking ahead, analysts are focusing on the upcoming Ethereum upgrade named Cancun. This upgrade is expected to enhance scalability and security, making layer-2 transactions as cost-effective as possible. If successfully implemented, Cancun could lead to a significant increase in the number of processed transactions on the Ethereum network.
Coinbase’s analysis highlights the fact that Bitcoin and Ethereum have undergone multiple cycles encompassing both bull and bear markets. The current cycle, initiated in 2022, closely resembles the patterns observed in the preceding ones.
The research report by Coinbase Research and Glassnode suggests that Bitcoin and Ethereum are following familiar patterns seen in previous years. While caution is advised when predicting future market performance based on halving events, there is potential for further price surges. Additionally, the success of the Ethereum Cancun upgrade could significantly impact the network’s scalability and transaction capabilities. As with any investment, careful analysis and consideration of various factors are necessary to make informed decisions in the volatile crypto market.
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