[TL; DR]
The bitcoin price surge above $65,000 will likely trigger a bull run in Q4, 2024.
Changes in monetary policies in the United States and China may help inject liquidity in the crypto market.
Examples of altcoins that are likely to trigger an altcoin bull run are Sui, Bittensor, Optimism, Helium, Celo and UMA Protocol.
Introduction
2024 has been a special year for bitcoin considering that the United States launched spot bitcoin ETFs in January. This development has enabled traditional investors to invest in bitcoin through regulated channels. Apart from attracting institutional investment, ETFs have increased the legitimacy of bitcoin and created confidence in the crypto sector. The U.S SEC’s approval of Ethereum spot ETFs further enhanced the acceptance of cryptocurrencies. With the rise in capital inflow in bitcoin ETFs and the Federal Reserve interest rate cuts the market anticipates a crypto rally in Q4, this year.
Bitcoin's Breakthrough Above $65K Shows the Market Optimism
Bitcoin finished September with an overall monthly gain of 7.35%. Therefore, it became a record month since during previous years bitcoin used to perform badly in the same month. On the other hand, bitcoin often performs impressively during October. According to Coinglass the foundation of bitcoin’s great performance was established during quarter 1 (Q1) when it had a record return of 68.68%. Nevertheless, in Q3 bitcoin gained by only 0.96%. However, what is impressive about bitcoin performance in Q3 is that its value rose by 7.9% in September. This was one of the largest gains the number one cryptocurrency had in the month of September. In many years, it used to register a negative return during the same period. According to Coinglass, bitcoin’s average return for the months of September is 3.77%.
To cap up the month of September the bitcoin price surpassed $65,000 as it reached $66,236 on the 27th. Generally, the value of bitcoin was above $65,000 between 27 and 29 September. By 30 September, though, bitcoin was trading below $65,000. However, the short-term bitcoin crypto rally that occurred between 27 and 30 September brought much optimism into the entire cryptocurrency market. As a result, the market anticipates that we may see a bitcoin rally in this quarter.
Crypto Market Insights: Why Investors Expect a 2024 Bitcoin Rally
There are several reasons why the crypto market anticipates a bitcoin crypto rally in Q4. First, the launch of spot bitcoin ETFs in the United States has enabled traditional investors to gain exposure to bitcoin without owning it. Based on the current crypto market trends, the ease of investing in bitcoin and the legitimacy the ETFs created has resulted in the rise in interest in bitcoin. The capital inflow into bitcoin through ETFs in Q4 may help to boost its performance.
The market impact of the 2024 halving event which reduced the bitcoin blockchain rewards from 6.25 BTC to 3.125 BTC may be evident in Q4. Usually, the reduction of bitcoin supply may lead to bitcoin surge in coming months. The decrease in bitcoin supply that is supported by a rise in demand due to spot BTC ETFs may result in a BTC rally.
Based on crypto trading insights several experts have predicted that a bitcoin rally may occur in Q4. For example, CryptoCon, a crypto analyst said, “The bull market for Bitcoin is next, plain and simple. Not a recession, not a bear market, or any other doom and gloom price action. The phases on Puell Multiple make it abundantly clear that we are in the midst of the mid-top correction which comes just before the true bull run.”
He added, “The same as we saw in September 2012, 2016, and 2020. The Halving Cycles Theory Red Year (Bull Market) begins after November 28th, 2024, and will last through November 28th, 2025.” One of the bullish indicators for cryptocurrencies CryptoCon used to arrive at that prediction is the Puell Multiple, represented by the following graph.
Read also: Why Should You Pay Attention to Fractal Bitcoin? Puell Multiple Phases – x.com/CryptoCon
Crypto Con has argued that the current pattern is similar to what occurred in 2012; 2016 and 2020, where there were strong crypto rallies.
Altcoin FOMO: Analyzing the Surge in Speculation
The recent bitcoin price rally past $65,000m has generated much altcoin FOMO (what is Bitcoin FOMO - read here). Many investors are willing to alter their crypto investment strategies in line with the expected altcoin bull run. The Capriole Investments’ Altcoin Speculation Index is one of the metrics that shows a high probability of altcoin outperforming bitcoin. As an example, that index rose from 13% to 23% within 30 days. Basically, this index shows the possibility of altcoins outperforming bitcoin since its rise shows a high chance of a decrease in bitcoin dominance.
The recent surge in prices of some altcoins has resulted in a fall in bitcoin dominance. According to TradingView the bitcoin dominance fell by 1.57% to 57.51% during the last week of September. That metric helps analysts and investors to gauge the possibility of the relocation of capital from bitcoin to altcoins. The next graph shows the fall in bitcoin dominance during the last week of September.
Read also: The Calculation and the Significance of Bitcoin Dominance Bitcoin’s dominance Down by 1.57% - TradingView
Also, within the same period the Crypto Fear & Greed Index rose by 11% to reach a score of 61. A score of between 56 and 75 shows greed, meaning that the investors are buying more of the asset than before which may push its price up. However, during that time crypto market volatility is usually very high.
Already, several altcoins have been performing well which could contribute to the altcoin rally. For example, between 20 and 30 September SEI performed highly as it gained by 37.79%. Similarly, Wormhole (W) surged by 32.83%, while Shiba Inu had a 32.08% price rise. Also, the Shiba Inu trading volume increased remarkably during that period. As a fact Shiba Inu is very popular in some regions such as Asia. As an example, it is very popular in South Korea.
How Economic Policies Impact Crypto Investments
The global macroeconomic conditions contribute to the performance of the crypto sector. Expansionary policies result in a rise in macro-liquidity while contractionary monetary measures reduce global liquidity. For example, the 19 September Federal Reserve rate cuts may help to increase macro-liquidity which will likely trigger price rises during the remainder of the year. As a fact, the Federal Reserve cut interest rates by 50 basis points to bring the Fed funds rate to a range of 4.75% to 5%. Interest rate cuts in the United states often lead to a rise in market momentum in crypto. Thus, the recent aggressive rate cuts in the U.S and the prospect of further cuts may induce confidence in the crypto market which may lead to crypto rallies.
Around the same period China also introduced measures that may help to increase global liquidity. For example, the country launched the greatest economic stimulus since the peak of the Covid-19 pandemic. Apart from a broader-than-expected economic package to support the property sector, China also cut its interest rates by large margins. In addition, The People's Bank of China (PBOC) introduced new financial tools to boost the capital market. For example, it launched a swap program with an initial amount of an initial 500 billion yuan that will allow funds, brokers and insurers to access money to buy stocks. Such measures injected liquidity into the investment sector which can be channeled towards buying cryptocurrencies like bitcoin. The dominant crypto investment strategy during that period is the dollar cost averaging.
Predicting the Altcoin Bull Run
The market is likely to see an altcoin bull run depending on the dominant crypto investment strategy which smart investors will adopt. However, one of the contributing factors to an altcoin rally is seasonality. Based on past trends, for example, cryptocurrencies perform the best during the fourth quarter. According to Deutscher, a prominent crypto analyst, Q4 has been the best season for equities and other investment assets. As an example, since 1945 the S&P 500 has been gaining by an average of 3.8% during Q4. The similar trend has been observed on bitcoin and other leading cryptocurrencies such as ETH and SOL. Bitcoin has an average return of 88% in Q4 since it performed exceptionally high during 2016 and 2020.
Based on the concept of seasonality and several macroeconomic developments there is a high possibility for an altcoin rally in Q4. Already, Grayscale has identified some cryptocurrencies that may contribute to an altcoin bull run in Q4. These include Sui, Bittensor, Optimism, Helium, Celo and UMA Protocol. The following table shows some of the cryptocurrencies that Grayscale expects to perform outstandingly within that period. Grayscale Research Top 20 Cryptocurrencies for Q4 – Grayscale
As observed in the table, the other altcoins that may trigger the altcoin bull run include Pendle, Illuvium, Render, ThorChain, Raydium and Mantle. On the other hand, Deutscher has listed the possible top performers during Q4 as Near, FET, TAO, PRIME, ATH, WMT, FTM and SOL. Also, according to Michael Van Pope an altcoin will likely occur in Q4, as the next image shows his view. Altcoins May Rally – x.com/MichaelvandePoppe
Deutscher, mentioned above, also strongly believes that an altcoin bull run is on its way. He said, “Altcoins are about to break out of a multi-month downtrend. Q4 is set to be an exciting quarter, but if you want to maximize it - you MUST be holding the right altcoins.” Based on these comments and the general market sentiment an altcoin rally may start during Q4, 2024.
Conclusion
During the last week of September, the bitcoin price rose above $65,000 which generated hope that an altcoin bull run may start in Q4, 2024. Sui, Bittensor, Optimism, Helium, Celo and UMA Protocol are some of the altcoins that may perform impressively during that period. The FOMO that may follow a strong bitcoin rally will likely lead to the altcoin bull run. Also, macro- liquidity is likely to surge during the period following the interest rates adjustments in the United States and China.