Bitcoin could be on the precipice of a new bull market

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Bitcoin pulled back on Wednesday, which was an overall weak day for risk assets, but this one-day retreat doesn’t change the fact that the market’s biggest cryptocurrency is hot to start 2023.

In fact, some crypto market watchers believe that Bitcoin’s impressive start to 2023 could be the start of a potentially long new bull market. If this scenario materializes, it could raise equity-based and crypto-correlated exchange-traded funds, including blockchain users Invesco Alerian Galaxy and decentralized trading ETF (BLKC).

BLKC has 57 holdings, and to varying degrees, a significant portion of the ETF list qualifies as crypto-correlated. Translation: A new bitcoin bull market could be a positive catalyst for this ETF.

According to CryptoHornHairs analysis, the first 1064 days of each cycle involves a massive rally from the previous bear market low. Once the market has peaked, it then enters a 364-day bear market. This pattern has been followed exactly over the past two cycles. This implies that Bitcoin is likely to rally over the next few years and peak in 994 days (1001 days at the time of CryptoHornHairs’ publication), before entering a 364-day bear market, Joel Frank reported for CryptoNews.

Of course, past performance is not a promise of future returns, meaning there is no guarantee that a new bitcoin bull cycle will be the same as previous comparable cycles. For many BLKC holdings, this is not necessary. Some components of BLKC, including bitcoin miners, are so battered by last year’s weakness that even a modest rise in the digital currency could boost the ETF.

It should be noted that even if Bitcoin ends up following its historical four-year market cycle again, the gains made during the coming bull market phase are unlikely to match those seen in the past. In the bull market from 2015 to the end of 2017, Bitcoin showed a rally of nearly 13,000% before the start of the bear market. Meanwhile, during the bull market from late 2018 to late 2021, Bitcoin recorded a still impressive but much more subdued rally of 2,000%, according to CryptoNews.

Beyond pure bitcoin price action, BLKC has other attributes that could support the upside this year. These include a relatively dense concentration of quality and value stocks compared to other crypto-related ETFs. About 37% of fund holdings are classified as value stocks, and constituents such as Mastercard (NYSE:MA), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN) and Verizon (NYSE:VZ) have characteristics of clear quality. More quality can mean less volatility, which is always a desirable trait when it comes to crypto investing.

vettafi.com is owned by VettaFi, which also owns the index provider for BLKC. VettaFi is not the sponsor of BLKC, but the affiliate of VettaFis receives index license fees from the sponsor ETF.

For more news, insights and analysis, visit the Crypto Channel.

Opinions and predictions expressed herein are solely those of Tom Lydon and may not materialize. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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