Investors in the cryptocurrency market emerged from a bear market for the first time in months, with crypto assets like Ethereum, Lido and Polygon jumping 50% after hitting recent lows. Many were hoping that this was the start of a bull market and that the Ethereum merger would make new highs, but that may not be the case.
After months of dire price action, the cryptocurrency market has finally started to recover over the past week. Ethereum, which was trading below $1,000 a month ago, has now risen to highs of $1,500. Additionally, Bitcoin recently surged from $19,000 to $23,000. Altcoins have performed equally well, with Lido up 131% over the past week.
Some investors believe that anticipation of an Ethereum merger has contributed to the recent rally. The merger marks a change in Ethereum’s consensus mechanism, from proof-of-work to proof-of-stake. This means that the energy consumption of Ethereum is expected to be reduced by 99.97%, which is very environmentally friendly and one of the most important events in the history of cryptocurrency.
While the Ethereum merger is undoubtedly a major event, it may not be enough to get us out of a bear market for several reasons. First, a typical cryptocurrency bear-bull cycle lasts around 4 years. For example, the last major bull market in cryptocurrencies was in 2017, ended in 2018, and then the next bull market did not begin until 2022, which has happened three times.
Second, large technology upgrades have failed to cause other asset prices to surge. Most of the time, the promise of an upgrade is already priced in by the market, which may be the case with Ethereum. The merger has been in development for several years and has been delayed several times, meaning anyone who wanted to buy Ethereum before the merger has already done so. It’s a huge milestone for the cryptocurrency industry, but it probably won’t generate enough public excitement to pull the $1 trillion market out of a bear market.
Finally, the macroeconomic environment is not ideal for cryptocurrencies. Across the world, countries are bracing for a pullback or a possible recession, and the current economic conditions are more dangerous than at any time since Bitcoin came out in 2008. In these new macroeconomic conditions, the cryptocurrency market is heading into uncharted territory. The cryptocurrency market could fall to dire lows as investors pull out of risky assets like cryptocurrencies. Bitcoin, on the other hand, may be seen as a hedge against government currency, and no one really knows what will happen to financial markets in the next few years.
Taken together, it looks like this will be a short-term bull run until the larger market contraction continues, largely because of the macro market environment, but the speed of the market recovery is unprecedented. It also gives investors the opportunity to buy cryptocurrencies at low prices and build up a solid portfolio before the real next bull run begins.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/will-this-mini-crypto-bull-rally-continue/
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