Is the Crypto Market Ready for a New Bull Cycle? A Quantitative Analysis

When evaluating an investment opportunity in any sector, investors typically ask three critical questions:

1. Is the sector saturated?

2. What is the growth potential?

3. Is it a good time to enter?

In this blog, I will explore these questions through a quantitative lens, focusing on the cryptocurrency sector. Additionally, I’ll provide my estimated cycle top value for the total crypto market cap and a bonus prediction for Bitcoin. I’ll also touch on altcoins.

Is the Crypto Sector Saturated?

To assess whether the crypto market is saturated, one effective tool is Google Trends, which measures the public's interest in specific search terms over time. I’ll use Bitcoin as an example, which currently accounts for approximately 57% of the total crypto market cap (valued at $1.26 trillion).

Interestingly, search interest in Bitcoin is currently at bear market levels, similar to when Bitcoin was priced at $20,000—despite its current value at around $63,000. This suggests that public interest in Bitcoin, and by extension, the broader crypto sector, remains relatively low. Historically, interest tends to surge during bull cycles, which excites me about the potential return of interest and growth.

The low search volume for Bitcoin, the largest cryptocurrency, indicates that the sector is not saturated. In fact, when looking at search trends for more generic terms like "cryptocurrency," we see similar patterns of low interest.

What is the Growth Potential of the Crypto Sector?

Understanding the growth potential of any sector is crucial for investors. By analyzing historical data from 2010 to the present, we can derive insights into the future trajectory of the cryptocurrency market. Specifically, I used data from both CoinMarketCap and CoinGecko to examine the total crypto market capitalization—and the results were quite revealing.

The total market cap follows a power law regression, a mathematical relationship often found in systems that exhibit long-term, sustainable growth. Bitcoin itself follows a similar power law with an exponent of 5.7. However, the broader crypto market, driven by the introduction of countless new projects—both successful and unsuccessful—has an even steeper power law growth, with an exponent of 6.81 (CoinGecko data) or 6.79 using the CoinmarketCap data. This indicates that the continued effort of projects to build a crypto-native application that will accelerate crypto adoption is a net positive for the market. Decentralised Finance (DeFi) has been the most successful until now, with many to come.

What does this mean for investors? First, it’s a positive signal that the crypto market is not only growing but doing so in a sustainable manner. In fields like physics, power law growth is preferred over exponential growth, which can be unstable. Exponential growth is often associated with rapid rises and equally sharp collapses, much like the discharge of a capacitor or the radioactive decay of elements. Power law growth, on the other hand, suggests a steadier, more enduring expansion.

By applying this power law model, we can estimate the market’s future cycle top value. Using the two standard deviations (+2SD) line as a guide, we can project where the next cycle top might land. In previous cycles, market peaks have surpassed the +2SD line, but in each cycle, it comes closer and closer to the +2SD due to diminishing returns. If we assume that the total crypto market cap reaches, but does not exceed, the +2SD line in the next cycle, I estimate a potential market cap of more than $11 trillion by November 2025—the date I’ve selected for the cycle top. However, our platform's interactive plot allows you to input any date and see the corresponding market cap estimate.

A tool to monitor the potential top of the total crypto market cap daily is to use the total crypto market cap deviation from its power law line. When the total crypto market cap deviates more than +70% from its power law line, then it is a good sign to start preparing your exit strategy. Of course, there are many tools that you can use, but this is a robust one.

Is Now a Good Time to Enter the Crypto Market?

To determine whether now is an optimal entry point, it’s important to assess where we stand in the current market cycle. Historically, the total crypto market cap has found support near the -2SD line during bear markets and periods of low investor interest. When the market touches this line, it has often signaled an attractive entry point.

As of September 7th, the market bounced off the -2SD line, indicating that we are in a strong position relative to historical market cycles. With current prices far below my projected +2SD target for the cycle peak, it appears to be an excellent time to enter the market (not financial advice).

Moreover, based on my Q4 2024 analysis (which I covered in detail in a previous article and video), I anticipate that the next crypto bull run will begin in 1-2 months, likely driven by a combination of macroeconomic factors and upcoming quantitative easing. Investors who want to capitalize on this opportunity should begin their research and preparations now.

Bonus: My Bitcoin Price Prediction for 2025 and Altcoins Outlook

As promised, I’ll conclude with my Bitcoin price prediction. Assuming Bitcoin reaches its cycle top in November 2025, I estimate that it could reach $199K. For those who believe Bitcoin’s peak will occur earlier in 2025, our interactive platform allows you to adjust the date and explore corresponding price projections. Each model we provide is accompanied by detailed explanations, so if anything is unclear, you can find support within the platform or ask me directly.

When the market enters its exponential phase, Bitcoin will rise alongside altcoins. Still, I expect altcoins to outperform Bitcoin and Bitcoin dominance to drop as investors will increase their risk tolerance and speculation threshold.

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