Despite the strength of conviction held by different market analysts, no one knows whether the heating up of the crypto market is the start of the next bull run. While we eagerly anticipate confirmation of a market upswing or downturn, it’s worthwhile looking at the likely characteristics of the next bull market and how we are gearing up for it.
There has been much speculation about whether another bull run will occur in crypto or whether we’re in for an extended period of consolidation. Some factors support both outlooks, and in the absence of crystal balls, it seems anyone’s guess is valid.
As we’ve mentioned before, liquidity is a crucial catalyst for bull markets in crypto. Without significant capital inflows, any upward movements are simply liquidity moving from one area to another. It’s similar to being on a small boat and everyone suddenly rushing to one end of it. It increases volatility but doesn’t expand the size of the market.
The speculation that a new bull run in the market might begin is based on the idea that when a spot Bitcoin ETF is approved in the US, a lot of money will quickly come into the market from prominent investors. No one knows how this would happen; they assume that a certain percentage of investors’ assets would be transferred to Bitcoin through the ETF.
Notably, entities like BlackRock have a track record of collaborating with regulators, such as the SEC, to ensure market stability. Hence, it’s improbable that they wouldn’t have devised a contingency plan to smooth the capital inflow to the crypto market. This could involve using ETFs backed by paper Bitcoin, mirroring the approach employed in the gold market with paper-backed ETFs.
Regardless of the method, the SEC’s approval of a spot Bitcoin ETF promises to unleash a significant capital influx, triggering a surge in crypto prices across the board. Whether this is enough to sustain a bull market is uncertain. What is very likely, though, is that the triggering of price rises will put crypto back in the spotlight and attract a lot of new entrants to the market.
Historically, crypto bull markets have been characterized by a rapid influx of novices, and the behavior of these newcomers is remarkably predictable. As before, we can anticipate a surge in YouTube influencers touting the next “1000x gem,” with individuals chasing quick gains with little insight.
There will be a rapidly expanding pool of influencers vying to promote the latest memecoin to unsuspecting viewers, with prices quickly rising and falling. Likewise, narratives will ebb and flow throughout the cycle, and fortunes will be made and lost.
The frenzy accompanying a crypto bull market evokes memories of the gold rush in the Wild West. It’s a joyously chaotic environment that demands meticulous planning to avoid being swept away by waves of success and failure.
Understanding this, we’ve taken a sensible approach to whitelisting assets on Paribus. Even when we’re a fully-fledged DAO, safety measures will be in place to guard against high-risk assets from being accepted as collateral, as these can rapidly overexpose the platform to significant danger.
Explaining how this approach will apply in the case of NFTs, Wilson, our COO, said, “Initially, the whitelisting will have to be done by the central team here, because the NFT collections that are whitelisted need to fit certain requirements. Having liquidity and the ability to make liquidations, things like that will be a requirement. We can’t just select any NFT collection.
“As the platform matures and we have more governance, we’ll put things to the community. Essentially, they can select their own NFT collections. But we want to be careful because NFT collections could be manipulated to take advantage of the protocol, and we want to avoid that at all costs.”
Just as we’re preparing for the resurgence of the NFT market, we’re also preparing for the usual ups and downs of the bull market. While the journey has been long and posed several new challenges, we’re as excited as everyone else is with the prospect of the upcoming bull market, whenever it may appear.
@CardanoFeed - Follow us on X (formerly Twitter)
Stay informed with the latest $ADA Cardano news in real time.FOLLOW NOW!