Bitcoin Returns After 34% Plunge…Signals Emerge for the End of ‘Crypto Winter’

▲ Bitcoin (BTC), Ethereum (ETH), Crypto Winter/AI-generated image ©

Bitcoin (BTC) has surged past $85,000, reaching its highest level in 8 months, overcoming a period of sluggishness that saw it drop nearly 34% year-to-date. With improving regulatory environments and the recovery of key technical indicators, expectations are growing that the 'crypto winter' is ending and a new bull market has begun.

According to investment media outlet The Motley Fool on September 22 (local time), Bitcoin exceeded $85,070 as of 8:40 AM ET, nearing its highest level in 8 months. Earlier this year, Bitcoin had fallen by about 34% due to investors' shifting interest to new technology sectors like artificial intelligence (AI) and macroeconomic pressures, such as soaring bond yields during the Iran war. However, it has largely recovered its losses with a strong rebound over the past month.

Changes in the regulatory environment were also cited as a factor supporting investor sentiment. Upon taking office, U.S. President Donald Trump appointed digital asset-friendly regulators, ordered the establishment of a U.S. Strategic Bitcoin Reserve, and promoted policies to expand investment opportunities in alternative assets, including cryptocurrencies, for retirement pensions. In the U.S., the GENIUS stablecoin regulation bill was also passed, establishing a federal regulatory framework for stablecoins.

Matt Hougan, CIO of Bitwise, evaluated that an unusual situation has emerged where the long-term fundamentals of the cryptocurrency market have improved even during periodic price declines. He predicted that prices would catch up with fundamental improvements towards the end of the year, suggesting that this rally could be the strongest and longest-lasting bull market in crypto history. However, a variable is that cryptocurrencies, including Bitcoin, do not generate profits or free cash flow like corporations, making it difficult to value them in the same way as traditional stocks.

Technical trends are also improving. BTIG analysts suggested that if Bitcoin holds the $75,000 level, it could rise past $82,000 to $90,000. Last week, Bitcoin closed above its 50-week moving average on a weekly closing basis for the first time in about 11 months. Galaxy's analysis of major Bitcoin downturns since 2011 showed that in 13 instances where the weekly closing price rose above the 50-week moving average during a decline, a new low was not formed afterward in 11 of those cases.

However, The Motley Fool noted that it is difficult to conclude that the bear market has ended and a bull market has begun based solely on current movements, due to the extreme difficulty in predicting short-term cryptocurrency prices. In the long term, they highlighted that Bitcoin, with its supply capped at 21 million, is valued as 'digital gold' to hedge against inflation and currency depreciation. Additionally, Ethereum (ETH), a core network for smart contracts and decentralized finance (DeFi), and Solana (SOL), known for its high transaction processing capabilities, were also mentioned as key digital assets worth considering for the long term.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*