What Happened: The cryptocurrency market capitalization reclaimed a valuation over $1 trillion on Monday, July 18 as Bitcoin BTC/USD and Ethereum ETH/USD lead the market recovery.
Bitcoin is up around 4.5% in the last 24 hours, while Ethereum saw an increase more than double that of Bitcoin, with 24 hour returns sitting at 9.6%. With Bitcoin and Ethereum up over 50% from their local bottoms, investors are beginning to turn bullish again. But, is this the end of the bear market, or are we in for a longer ride?
Why It Matters: After cryptocurrency exchange insolvencies and general fear in the markets, Bitcoin and other digital assets fell nearly 80% from their all-time highs. Crypto winter refers to cryptocurrency bear markets, and during these times there’s a lack of interest in crypto and volatility is often to the downside.
Even with a 50% increase in the prices of major cryptocurrencies from their local lows, cryptocurrency enthusiasts and long-time crypto investors remain wary of a long-term crypto winter.
Historically speaking, cryptocurrency bear markets can last years, not months. Moreover, there were large price increases in digital assets through the beginning of the last crypto winter in 2018, yet the macro-trend remained bearish.
See also: How Long Will The Bitcoin Bear Market Last?
To some, this recent pump may be an opportunity to take profits and have cash ready to deploy at lower prices. However, the upward momentum may continue leading into Ethereum’s Merge scheduled for September.
The Merge has drastic effects on the tokenomics of Ethereum, reducing its token issuance from 4% to 0.4%, and comparisons can be drawn between Bitcoin halvings and The Merge. Bitcoin halvings take place every 4 years, and they have historically led the way for the next bull market.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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