Author: Dan Polotsky, CoinDesk

Translation: Felix, PANews

As the Bitcoin halving approaches, it seems that we are at the forefront of a major event. While everyone is closely watching the soaring Bitcoin and the possibility of reaching new highs, the impact of this halving is profound and will affect all aspects of the cryptocurrency market, possibly even marking the end of the four-year bull-bear cycle in the cryptocurrency market.

This is not just a digital issue, but a potential significant shift in the way traditional industries perceive and interact with digital currencies. Be prepared, as this may be the beginning of a whole new era for cryptocurrency.

The Rise of Bitcoin

Recently, driven by the upcoming Bitcoin halving in April, the approval of a Bitcoin spot ETF in the United States, and financial institutions such as BlackRock entering the cryptocurrency industry, the price of Bitcoin has surged significantly. This institutional interest has brought unprecedented demand, and Bitcoin hit a historic high of over $73,000 on March 13. The new high may have been driven by ETF inflows, with $1.045 billion flowing in on March 12.

The launch of ETFs signifies broader recognition of cryptocurrencies as legitimate assets, and institutional investment has entered a new stage. This has further enhanced the credibility of Bitcoin and the accessibility of retail investors.

These milestone developments allow investors to gain exposure to Bitcoin without the complexities of direct ownership. The increased liquidity and stability may continue to attract a wider range of investors, drive broader mainstream adoption, and further boost the current surge in Bitcoin prices.

Of course, the bear market still exists. However, price predictions for Bitcoin range from $150,000 to $250,000 per coin, indicating that a large amount of institutional capital is about to flow into the Bitcoin market. This event marks a potential shift in its historical cycle dynamics, driving growth and innovation in multiple digital asset fields to new levels.

Nothing is Absolute, Potential Negative Factors Still Exist

Despite the clear bullish trend in the cryptocurrency market, there are several factors that could disrupt this trend. Persistent inflation may prompt monetary policy tightening, affecting higher-risk assets such as cryptocurrencies. Sluggish economic growth may also weaken investor confidence and shift attention away from speculative investments.

Another short-term negative factor is in the mining sector. The upcoming 2024 halving event is expected to trigger large-scale consolidation and defaults, as cash-strapped mining companies will face declining profit margins and high operating costs. This may force mining companies to sell off Bitcoin in bankruptcy, thereby depressing Bitcoin prices. In addition, regulatory changes and reduced inflows of funds also pose challenges and may exert downward pressure on prices.

The uncertainty surrounding the 2024 election adds another layer of unpredictability. Election results could lead to different regulatory changes, and the U.S. government's stance on cryptocurrencies may change. While a Republican president may offer a more favorable regulatory environment, alignment with values such as financial inclusivity and environmental sustainability may promote bipartisan support for cryptocurrency regulation.

Has the Cryptocurrency Bull-Bear Cycle Ended?

Perhaps the most unexpected impact of the halving is the other effects it brings. While historically, halving has been a driving force for bull markets, its impact may be overshadowed by other factors, such as net inflows into ETFs, which currently total over $12 billion. Institutional and retail ETF investors, under the guidance of experienced investment advisors skilled in "buying on the dip," may intervene in the market, potentially weakening the effect of the halving on market advancement.

This would mean the end of the typical four-year bull-bear cycle in the cryptocurrency market, with a potential future of relatively stable upward trends. Inflows of ETF funds will become the main catalyst for cryptocurrency adoption. It is worth noting that this round of Bitcoin price surge began before the halving, which has not been the case in the past.

This shift may have far-reaching implications for the entire industry. Initially, the spirit of cryptocurrency was rooted in resistance to centralized currencies and institutions, with the slogan "no keys, no coins." Now, it seems that the dominant force in the cryptocurrency field may soon be controlled by a few institutions, which goes against the initial decentralized ideal.

The tilt towards institutional ownership may lead to even greater things: sovereign nations owning Bitcoin. More countries may follow El Salvador's lead, starting a race to accumulate cryptocurrencies, thereby initiating a super cycle of global mainstream adoption.

This change may also lead the cryptocurrency market to break free from the traditional boom and bust cycles, creating a more stable environment for the industry's growth and development.

While retail investors who can enjoy the benefits of a bull market may be fewer, they will also be spared the harsh reality of buying at the peak and suffering losses during market crashes.

This new stability can provide opportunities for cryptocurrency companies and projects to focus on sustainable, long-term development, rather than relying solely on navigating market cycles, which can be extremely challenging during cryptocurrency winters.

As investors and enthusiasts prepare for higher volatility, it is clear that the market is on the verge of unprecedented eruption and may undergo fundamental changes. While the future may be mixed, the upcoming period may herald the departure of cryptocurrency from its infancy and mark a significant transformation. Before bidding farewell, we should be ready to celebrate its "last dance."

Related Reading: Bitcoin returns to $71,000, analyst: next target is $83,000

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