Is crypto’s bull market back?

“Are we back?”

It’s a question many have asked amidst the bitcoin buying frenzy of the past couple weeks.

All the excitement in buying activity seems to trace back to news regarding a potential spot bitcoin ETF approval, Blockworks co-founder Ippolito says.

“Are we back? Are we not back? Whatever,” Framework Ventures co-founder Vance Spencer answers. “There’s just been a lot of real work that’s been done in crypto over the past 18 months since the Luna collapse.”

Speaking on the Bell Curve podcast (Spotify/Apple), Spencer points out a number of positive advancements in the crypto industry: “You have [Treasury bills] coming on-chain,” he says, adding, “I think Synthetix might hit a billion of volume today.”

Spencer goes on to list recent improvements to DeFi services like derivatives exchange dYdX, market share gains for the Lido’s ether staking service and the imminent release of blockchain-based games by “the end of the year.”

Read more: Did Lido fly too close to the sun? Inside the centralization debate

On top of all that, Spencer adds, “the institutions have finally adopted this, with Larry Fink on Fox News shilling bitcoin.” Spencer suggests that with all the groundwork that builders are laying, “you’re probably looking at a bull market” in the next couple of years.

A shift to tailwinds

Crypto is decoupling from other markets, Spencer says, “exactly at the time you would hope it would” — a time of geopolitical uncertainty, growing debt loads and high budget deficits. “The narratives couldn’t be much better for crypto,” he says.

Spencer mentions the likely directional shift in real rates as another positive for crypto valuation. “It’s not about whether you’re at zero rates or 5%. It’s about, what’s the direction of travel and what’s the rate of change?”

It’s finally time to be optimistic about crypto market conditions, according to Spencer. Looking back at eight drops of around 30% during volatile trading periods in 2021, Spencer says each market pullback “was a pretty incredible opportunity.”

“So that’s at least where our head is at,” he says. “It’s just continuing to accumulate high quality assets.”

Blockworks co-founder Michael Ippolito says he has seen a shift from “headwinds” to “tailwinds” in the industry’s outlook.

Now, he says, the bitcoin halving is in “spitting distance” and potential spot bitcoin ETF approvals have created a positive buzz. Real rates, he adds, are “probably going to move in the opposite direction, which is good for bitcoin, good for crypto.”

For the first time in years…

Spencer recounts a recent anecdote that reminded him of past bull market euphoria. Strolling through West Village, he overheard a phone conversation of someone hurriedly helping a friend onboard to Coinbase on the day that “bitcoin popped.”

“There’s like this frantic scramble [to] get the app downloaded and get on Coinbase,” he says. “I thought that was pretty funny. I just haven’t heard that in, I guess it’s been almost two years.”

“The price action last week was pretty violent,” Ippolito says. One bitcoin trading candle printed nearly 3,000 dollars, he says, “in a very short period of time.”

“That’s the first time I’ve seen something like that happen…in years,” he says.

Read more: Blockworks podcast guests ruminate on bitcoin ETF buzz

Spencer recalls a recent dinner event with a Wall Street trader, where the two got into a discussion about investment in long bonds. “I was like, how much would I make, you know, if I did that?”

The trader replied, “if rates go from 5% to 3% or to 2%, you’re gonna make 30%.”

“I was like, that is just not interesting at all.”

“And sure, you might be able to make 5% in [Treasury bills],” he says, “but we put that move in, in a day for bitcoin,” he says.

Price moves first

Ippolito cites an article by Chris Dixon and Eddy Lazzarin, which describes a counter-intuitive take on the more conventional “fundamentals drive price” adage. The article suggests that in crypto markets, price moves first, spurred by low liquidity, speculative behavior or other unknown factors that initiate an upward trajectory.

“The price gets people to make the calls that you were describing in the West Village,” Ippolito says, “like, ‘Hey, get me on Coinbase.’ Like, ‘this bitcoin thing is moving. I’ve got to get in.’”

“That price move begets more buying,” he says. “Then the media starts covering it for the first time in a positive light.”

“That begets actual fundamentals — which is devs coming in, people building products and then the VC funding cycle typically restarts — and then you’re off to the races.”

“It’s hard to predict how and when that kicks in,” he says, “but I feel like that’s the thing that has to kick in now.”

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