Analyst Note: Where Are We in the Crypto Cycle?

Can cryptocurrency prices sustain their recent momentum? Or did the current price cycle already peak earlier this year?

Produced by research firm Praxis Veritas in conjunction with Gemini, our latest analyst note, “Where Are We in the Crypto Cycle?” offers a nuanced look at the different macroeconomic conditions that could drive the price of digital assets up over the coming years.

A few takeaways from the report:

• Global monetary policy should have minimal impact on crypto going forward: As we look to the future, the risks to long-term interest rates across the globe now skew to the downside, which is a tailwind for the crypto cycle. Depreciation pressures for the US dollar are likely to continue to rise, and that could help crypto prices also rise against the dollar. If a broad weakening of the dollar and the Fed’s monetary policy converge with other central banks, it will be a net positive for crypto prices.

• Policymakers remain sensitive to asset prices: Policymakers will tend to respond more aggressively to negative asset price shocks compared to the response to surging inflation or outsized growth. This dynamic has emerged as a key tailwind for bitcoin’s prices. Owning an asset that exists outside the traditional financial system gains value in a world where policymakers are systematically intervening to preserve the status quo. This paradigm remains as relevant as ever in informing a forward-looking view for major macro-sensitive crypto assets.

• Global regulatory risks for crypto have improved: In the United States, crypto has recently become a focal point for a Republican party determined to help the country become a leader in digital assets. Additionally, aides for presidential hopeful Kamala Harris have reached out to top crypto industry leaders, perhaps signaling a willingness to reverse the aggressive crypto enforcement policies instituted under President Joe Biden. Beyond US borders, the possibility that China un-bans crypto is also rising, and Hong Kong’s regulatory climate has become much more accommodative to the industry over the past 12 months.

Onward and Upward!

Team Gemini

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