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Coinbase Global (NASDAQ: COIN) Chief Executive Officer Brian Armstrong told CNBC on Aug. 20 that he thinks crypto is on the verge of a new bull market. If he’s right, now would be the time to finish loading up on any assets, before they start to get pricey.
So, is Armstrong’s prediction likely to play out? Let’s look at what the historical data says.
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He makes a good argument
Armstrong’s rationale for believing that the ongoing crypto bear market is approaching its end is based on three pillars.
First, the current downturn has lasted for 10 months, which is about as long as crypto bear markets have tended to last in the past. On its own, that’s not any guarantee of better times coming, though it does suggest — at least psychologically — that investors could be ready to believe that rising prices are possible again.
The second part of Armstrong’s argument is that the Senate now has a vote scheduled for the Clarity Act, slated for Sept. 15. He’s bullish about the bill’s chances of passage, and it’s probably true that getting legislation that defines the rules of competition in the industry would be a tailwind that could help with exiting the bear market.
Lastly, he said that <a href="https://xpertsstudio.com/bitcoin-etfs-pull-1-97b-in-april-for-best-monthly-inflow-this-year/” title=”Bitcoin ETFs Pull $1.97B in April for Best Monthly Inflow This Year”>Bitcoin (CRYPTO: BTC) has historically done well during the fourth quarter. Given that its median return in the fourth quarter is 47.7%, he isn’t wrong on that point. Ethereum (CRYPTO: ETH) has also tended to perform well in that period, with a median gain of 22.5%.
The broader idea he’s getting at is that Bitcoin has always led the broader crypto sector in the past, with Ethereum following and paving the way for other coins to rally as well.
But things could be different this time; as financial institutions become larger and more important holders of Bitcoin as well as other cryptocurrencies, the old dynamics influencing price action and market structure may not be applicable anymore.
Don’t take the timeline too literally
Armstrong’s prediction is more likely to prove true than false, but that doesn’t mean you should try to time the market, even given that the crypto sector has a big catalyst coming up on Sept. 15. Prediction markets imply that the Clarity Act’s chances of passing are about 18% or so as of Aug. 24. If the bill isn’t passed at that point, Congress could take another go at it later in the year, or in 2027.
Source: finance.yahoo.com