Are we back in the cryptocurrency bull market?

After a week of positive price movements in the cryptocurrency market, many people rejoiced in the continued promise of the bull market. Although there have been some good news recently, such as the activation of EIP-1559, there are also some regulatory concerns. Investors are cautious but optimistic.

In the first half of 2021, when the cryptocurrency market rose rapidly from US$750 billion to US$2.5 trillion, investors were very optimistic that Bitcoin would reach US$100,000. Unfortunately, the market has been falling steadily since mid-April, with a drop of nearly 50% and a loss of more than $1 trillion. This large-scale correction has caused many newcomers to the cryptocurrency field to lose a large part of their initial investment, although investors before 2021 are still profitable.

Are we back in the cryptocurrency bull market?

Many people speculate that this decline will be the beginning of a four-year bear market, but this does not seem to be the case. Since Bitcoin fell below US$30,000 on July 20, the market has begun to rebound. The current total valuation has reached US$1.7 trillion, and it has risen by nearly 50% in the past three weeks.

Although market adjustments have devastating effects on individual holders, they are generally beneficial to the overall health of the market. For example, in the previous bull market, many memecoins have reached astronomical valuations, such as Dogecoin, Shiba Inu and Safemoon. Even after the recent rise, some of these memecoins are still down 75% or more from their all-time highs, and may never reach new all-time highs. With the reduction of scams and memetic projects, high-quality cryptocurrencies have more room for development and prosperity.

Are we back in the cryptocurrency bull market?

There seems to be no real reason for the market’s rise. The recent implementation of EIP-1559 (EIP-1559 is an upgrade to Ethereum) seems to be one of the reasons. This upgrade caused some transaction fees for using the Ethereum network to be burned and deducted from the total supply instead of being allocated to miner. This means that with sufficient transaction fees, Ethereum may experience deflation, and any assets with reduced supply and fixed demand will rise.

Although this is convincing, it cannot explain why all cryptocurrencies, not just Ethereum, are rising. It can be said that this upgrade is not good for Bitcoin. It brings Ethereum closer to becoming a store of value asset like Bitcoin, so Bitcoin should fall.

Another speculation is that the cryptocurrency whale has stopped manipulating the market and creating selling pressure. They are now creating buying pressure, which will increase the value of the assets they hold and will immediately sell some cryptocurrencies when they wish. If this guess is correct, then the current upward trend is only temporary, and it will last as long as the whale wants to last.

Although the price increase is entirely good news, there have also been some negative news in the United States. Part of the infrastructure bill being evaluated by Congress is about taxation of cryptocurrency and the crypto industry. Currently, this will require all wallet providers, exchanges, and proof-of-stake representatives to provide tax documents to their users, which is practically impossible and will destroy the U.S. crypto industry. Fortunately, Senators Lummis, Wyden, and Toomey proposed an amendment to exempt these entities from the proposed tax requirements, which is very positive for the market. Usually during periods of uncertainty, prices will remain stable, so there is no reason for a sharp upward movement. At present, there are more supporters than opponents of the amendment, but it is still unknown whether it can be passed.

Are we back in the cryptocurrency bull market?

Although the reasons for the market’s rise are still uncertain, investors can be cautiously optimistic about future price trends. At current prices, many people still believe that cryptocurrencies are undervalued, so this price fluctuation may just be a callback to the true value of cryptocurrencies. Regardless of the reason, there are both celebratory news and daunting news in this field. Therefore, when investors choose the next move, they need hard work and rational thinking at all times.

 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/are-we-back-in-the-cryptocurrency-bull-market/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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