Why the Next Bitcoin Bull Run Will Be “Very Different”

Cameron Winklevoss, the billionaire founder of cryptocurrency exchange Gemini, believes the next Bitcoin (BTC) bull run will be very different. Compared to previous bull runs, Winklevoss noted that there is essentially more capital, infrastructure, and better projects now.

Winklevoss said:

“The next Bitcoin bull run will be very different. There is exponentially more capital, human capital, infrastructure, and quality projects today than there was in 2017. Not to mention that all future fiat regimes will face inflation. Be prepared!”

Various data show that the amount of capital held by investors in the cryptocurrency market has increased significantly. Major cryptocurrency exchanges have also gained more regulatory clarity and improved market infrastructure.

Money Flowing Into Bitcoin Market

There are two important indicators that suggest that more money may be involved in the recent Bitcoin rally. First, Tether (USDT) has surpassed $10 billion in market capitalization. Second, the assets under management (AUM) of Grayscale Investments recently reached a new high.

Tether (USDT) market cap reaches $10 billion Source: CoinMarketCap

Tether is by far the largest stablecoin in the cryptocurrency market. Investors, especially in countries with uncertain regulations, rely on stablecoins to trade crypto assets. The rapid rise in Tether’s market value may indicate that more funds are waiting to flow into crypto exchanges.

Grayscale’s crypto asset trust is arguably the most widely used investment vehicle for institutions to gain exposure to cryptocurrencies. Last quarter, assets under management across Grayscale’s range of products reached an all-time high of $5.1 billion.

Grayscale's assets under management reached US$5.1 billion Source: Grayscale

Grayscale CEO Barry Silbert said:

“In 2013, everyone thought we were crazy for launching a Bitcoin investment fund. Well, now look at us…”

Tether's market capitalization combined with Grayscale's growing assets under management indicate that capital held by institutions and retail investors continues to increase significantly.

Crypto market infrastructure is improving

In 2020, exchanges and banks in the United States mainly saw regulatory clarity regarding cryptocurrencies.

The U.S. Office of the Comptroller of the Currency (OCC) has allowed banks to offer and operate cryptocurrency custody solutions. This essentially gives U.S. financial institutions approval to enter the cryptocurrency market.

JPMorgan Chase has reportedly accepted two of the largest U.S. spot exchanges, Gemini and Coinbase, as clients. With this move, concerns about strained banking relationships affecting exchanges and users have subsided.

Clarity on cryptocurrencies from major U.S. regulators and banks could improve mainstream investors’ perception of the asset class. This means that if Bitcoin enters a new bull run, improved sentiment across the industry will be good for Bitcoin adoption and its value.

Crypto startups are finding relevant use cases

Overall, the quality of projects and companies in the Bitcoin and crypto markets appears to be improving. This is partly due to greater regulatory clarity and a growing willingness by traditional companies to work with cryptocurrency companies.

For example, Bitcoin lightning startup Zap is working with Visa and participating in its “Fintech Fast Track Program.” As part of the partnership, Zap can launch a Visa card.

Zap CEO Jack Mallers said:

"We are contractually obliged to launch a Visa card within the next 12 months and we plan to launch one in the coming months."

Better projects, increased funding, and improved infrastructure are boosting confidence among Bitcoin investors, which is boosting confidence in the industry as a whole. In the medium term, prominent investors hope that Bitcoin will reflect these factors.