Does the recent price action indicate that the bulls are in charge but is it only a reversal before a bigger move down or is the long crypto winter over?

Is the bear market over?

It is now a fact that the cryptocurrency market is in the longest bear market of all time. Ran Neuner tweeted that January 16 marked the 390th day of the bear market. The winter during 2014/15 lasted 420 days and today (February 24th) marks the 420th day of the bear market. However, does the recent price movement indicate that we entered a bull market?

There are those who argue that the bull market is long overdue while others that the bear market will last a while longer. Mike Novogratz argue that the institutions will drive the next bull market and that they will enter once the infrastructure is in place. He stated that institutions find the market unsafe at the moment and bide their time while everything falls into place. It is taking place before our eyes. Two pension funds in the US recently announced that they anchor Morgan Creek’s crypto fund. Bitcoin among other digital assets might become part of people’s pensions.

However, So far, almost no institutional money has found its way into crypto assets because of the lacking infrastructure. That might change soon. Fidelity, with $7 trillion is coming to the crypto markets in 2019, and they will take over the custody of cryptocurrencies and the execution of transactions for institutional investors. Fidelity has around 27 million customers which they will be able to offer crypto related services to.

Other examples are; TD Ameritrade has about 11 million users and is preparing to open physical Bitcoin backed futures contract. Nasdaq shows its biggest interest by investing in blockchain startups. Citigroup will soon offer crypto-custody solutions to its institutional investor’s. ICE, the owner of the world’s second-largest financial stockbroker, NYSE, has raised 182 million to launch Bakkt in 2019. Bakkt is a platform for institutions, traders and consumers to trade, store and issue digital assets. Even JP Morgan shows interest in the new technology by creating its cryptocurrency, JPM Coin.

While the infrastructure gets in place, people also lose faith in the current financial system. The US debt just exceeded $22 Trillion, and some argue that it is just a matter of time before the time bomb.

Will the bear market continue?

However, the truth is that the infrastructure is not in place yet and things might take longer than investors anticipate. The most anticipated Bakkt has been delayed several times so far and might be again.

Bakkt is not the only project that is delayed. Investors thought that the Security and Exchange Commission (SEC) would approve an ETF during 2018 which did not happen. At the beginning of 2019, a lawyer even stated that a Bitcoin ETF would have a 10 per cent of approval. Even though SEC has more recently stated that an ETF will happen eventually, it can take some time still.

While speaking about the SEC, regulation is a major issue at the moment. Initial Coin Offerings (ICOs) took advantage of the non-existing regulation at the time. Many projects raised money just to run off with the capital and were outright scams. The CEO of AriseBank even got arrested by the FBI. The market has a lot to prove, and even though the potential of blockchain is enormous, it is too early to say that we are in a bull market. There are question marks around regulation, ETFs and the infrastructure among other areas in the industry. We must not forget that the industry is very young and 2019 might become a year that gives investors and developers a lot of clarity regarding the direction of the new exciting technology.

The Reddit Co-founder, Alexis Ohanian, explained that the industry grows during crypto winters. He expressed the situation like this:

“This is the Crypto Winter, no doubt,” Ohanian told Yahoo. “But a friend of mine, Brian Armstrong, who’s the CEO of Coinbase said, ‘This is the spring of crypto innovation.’ What he means is, ‘Yes, the prices are depressed. The speculators have fled, and that’s great.’ Because the people who are now building on crypto are true believers, they’re building the infrastructure that it’s going to take to make this happen.”

