Crypto Markets Due for a Bull Run. Factors to Base Your Allocation

Logic, emotions, and mathematical probabilities dictate that crypto markets represent a stable store of value over the long term. On November 10, the cryptocurrency market capitalization hit a peak market valuation of $3 trillion following a correction back to nearly $2.6 trillion as of writing. 

The crypto markets seem perfectly poised to embark on a new bull run with multiple factors set to influence crypto asset prices. Based on the current price and volume trends, it is likely that Bitcoin and Ethereum surpass their all-time highs to reach closer to the psychologically important levels of $100,000 and $10,000 respectively. So, let’s take a look at what factors suggest that we may soon see another bull run in crypto.

The Case for a Crypto Bull Run

Growing Interest in DeFi

The total volume locked (TVL) in DeFi protocols has jumped more than 1000% since the beginning of 2021 as it sits over $276.3 billion. This exponential growth represents the faith of early adopters and users towards the principles of decentralization. By enabling users to build multiple strategies with different protocols to meet their financial goals, DeFi has found its place among people, and its trajectory seems to be going parabolic.

The Trust Factor Across Social Media

As trust in DeFi gets stronger, creating and sharing economic value in the DeFi space is now a socio-cultural trend. Traditional social media platforms such as Twitter and decentralized social media networks with engage-to-earn models, like Crypter.io, perfectly capture the upcoming bullish sentiments based on the strategies and predictions shared by crypto thought leaders, investors, and traders. 

As the word about the benefits of crypto and blockchain platforms spreads, more users are tapping into decentralized exchanges, lending, borrowing, derivatives, stablecoins, insurance, staking, and yield farming. Combined together, these factors are already pumping cryptos to greater heights.

Play-to-Earn

In 2021, we have seen wider adoption of blockchain use cases in play-to-earn games such as Axie Infinity, My DeFi Pet, and Thetan Arena. There are also other older such as The Sandbox and Decentraland that have significantly aided the growth of the crypto markets throughout the year. 

These virtual economies incorporate a gaming element to help users financialize their in-game economic activities via blockchain. Play-to-earn, incorporating DeFi and gaming, is becoming an important benchmark for the overall crypto market going forwards, onboarding millions of new users to crypto via interactive games. It’s obvious that as more users join the crypto space, the prices of tokens of promising projects and blockchains will soar to higher highs. 

Institutional Activity at All-time High

Approximately 7.7% of the circulating supply and 6.9% of the fully diluted supply is currently held by institutions. These include public companies like MicroStrategy and Tesla, governments like El Salvador, and asset managers like Grayscale Investments. As per a new study by Ernst & Young, 31% of hedge fund managers, 24% of alternative investors, and 13% of private equity managers said they planned to add cryptocurrencies to their portfolios in the next one to two years. Key concerns include real-world utility of cryptocurrencies, high volatility and security of invested funds.

According to CB insights, in the first nine months of 2021, cryptocurrency and blockchain start-ups raised $15 billion in venture capital. This is approximately five times the total tally garnered in the whole year of 2020.

With institutional adoption and venture capital allocations toward cryptocurrencies and start-ups on the rise, we can expect a virtuous cycle whereby better DeFi products will lead to more cryptocurrency usage. This in turn, will lead to more investors coming into the crypto space who would want to replicate the success of ealy, high-risk appetite institutions.

The Road Ahead

As 2021 comes to a close, it seems like we’re on the cusp of a wave of positive sentiment for the benefits that cryptocurrencies and blockchain represent for common investors across the globe. This should manifest itself in the upcoming months as capital, talent and users continue to navigate the open waters of Web 3.0.