No matter what happens, the trend of Bitcoin and the crypto market is still upward, driving endless innovation in the industry.
Author: OKX
The Federal Reserve's interest rate in the United States remains at its highest level since 2022, between 5.25% and 5.50%. However, the expectation of the approval of a Bitcoin spot ETF and the pause in interest rate hikes by the Federal Reserve have boosted both onshore and offshore funds, pushing Bitcoin back into an upward trend. At the end of October this year, BTC broke through the 30,000 resistance level that had lasted for nearly half a year, leading to a rebound in the crypto market with a monthly increase of over 26%.
However, this round of market recovery is not easy. Since BTC hit a new high of $69,000 in 2021, the industry has entered a bear market lasting more than 2 years. By early October this year, industry data had plummeted to a "freezing point," with NFT market trading hitting a two-year low, ETH/BTC exchange rate hitting a 15-month low, total financing of crypto companies in Q3 hitting a low not seen since Q4 2020, DEX trading volume hitting a low not seen since January 2021, and Bitcoin balances on trading platforms hitting a nearly 5-year low. Funds continued to flee, and the market fell into a state of lamentation.
At this "darkest moment," the "spark" represented by Bitcoin Ordinals gradually gained momentum, with Bitcoin on-chain addresses reaching a historic high, and onshore long forces actively taking action, leading to a turning point in market sentiment. Subsequently, with the influx of 9 billion stablecoins, the crypto market swept away the gloom and experienced a major reversal. Projects and institutions that had actively positioned themselves in the bear market began to reap "rewards."
This article aims to explore the market from the perspective of industry high-quality projects and institutions that have successfully weathered this bear market cycle, such as dappOS, Taiko, Celestia, and OKX Ventures, and to find the key to the future development of the industry from their point of view, without constituting any investment advice.
Review of the past three bull and bear cycles
After more than a decade of evolution, the crypto industry has rapidly strengthened its connection with the traditional financial market and the real world through technological innovation, application iteration, and exploration of compliance. Looking back at the three bull and bear market cycles in the crypto industry, it is not difficult to find that new capital, new narratives, and new technologies ultimately determine the arrival of a bull market. Based on the narrative dimension, the three bull and bear market cycles in the crypto industry are briefly described:
2009-2015: The first bull and bear market cycle, innovative experiments, opening a new world
On January 3, 2009, at 6:15 p.m., the genesis block of Bitcoin was generated in a small server in Helsinki, Netherlands, marking the official birth of Bitcoin. At this stage, Bitcoin was still limited to "niche experiments" by professional developers and early explorers, mainly for the popularization of concepts and the formation of early consensus. Subsequently, the rudimentary industry infrastructure began to emerge, and with the launch of early exchanges such as Mt. Gox, Bitcoin entered the era of trading and ushered in a speculative frenzy. Its early trading price was $0.0008, and it soared to a high of $1202 in this bull market in 2013, before entering a bear market and bottoming out in 2015.
2015-2018: The second bull market cycle, the era of ICOs, and the formation of infrastructure
The market completed its recovery and opened a new cycle, laying the groundwork for the arrival of a bull market with the entry of speculative funds, developers, innovative technological iterations, and the Bitcoin halving narrative. At the same time, peripheral industries such as crypto media, mining farms, data tools, and crypto funds began to take shape. In 2017, with the explosion of the ICO model and the simultaneous flourishing of second-generation public chains such as Ethereum, a speculative frenzy erupted, and various wealth creation myths frequently appeared in the news. On December 17, the price of Bitcoin hit a historical high of $19,800, and the crypto industry began to receive wider attention. Subsequently, the crypto industry entered a new bear market, and with black swan events and regulatory policies, BTC fell to around $3000 in 2018, facing difficult development amidst doubts.
2018-2022: The third bull market cycle, mature infrastructure, and the explosion of on-chain applications
After three years of silence, with the continuous upgrade of the Ethereum network, blockchain technology transitioned from a bubble to an application stage. In 2020, various on-chain applications based on the Ethereum network, such as DeFi, NFT, DAO, GameFi, and IEO, exploded, attracting a large number of institutional investors and bringing in a large amount of new capital. At the same time, the enormous imagination constantly demonstrated by the crypto industry also attracted a large number of developers. Through continuous iteration and innovation of underlying technologies, the crypto industry further promoted the transition from "virtual to real," and various infrastructure continued to mature. With the superposition of various positive factors, Bitcoin hit a historical high of $69,000 on November 10, 2021, and subsequently entered a bear market lasting more than 2 years.
2022-present: The fourth bull market cycle, compliance and application landing as the development theme
Despite being severely hit by various black swan events, the industry continues to innovate and tends towards rationality and value investment. With the establishment and improvement of crypto regulatory frameworks, the expectation of the approval of a Bitcoin spot ETF by BlackRock, the rise of Web3+AI, and the emergence of the Bitcoin ecosystem, a new bull market is brewing.
Bitcoin has rebounded several times from the trough of the bear market and hit historical highs, demonstrating significant "resilience." As of November 3, Bitcoin's market value of $726 billion has surpassed that of Tesla, ranking 11th globally, indicating strong liquidity support and global recognition. However, as the liquidity depth and breadth of the crypto industry continue to increase, the market will tend towards rationality and maturity, and Bitcoin's volatility may further decrease. As an emerging financial format, the crypto industry is extending towards multiple narratives, no longer relying on the single narrative of Bitcoin halving, continuously exploring future development, and creating new imaginations. However, this process is full of thorns and twists, and industry participants with weak wills will be forced out.
Insights and actions of leading institutions
Under the pressure of a bear market lasting for several years, faith can also fail in the face of reality. As successful projects and institutions that have weathered the bear market cycle, through discussions with dappOS, Taiko, Celestia, and OKX Ventures on macroeconomics, bear market strategies, and focus areas, we explore how they understand the market.
The crypto industry cannot exist independently of macroeconomic cycles. Daniel Wang of Layer2 network Taiko believes, "Currently, the virtual asset prices are strongly correlated with the real economy or, in other words, with Wall Street. Therefore, if the real economy is not doing well, it is difficult for virtual assets to shine independently in a bull market. Unless there are more regional conflicts, or major countries lose confidence in the US dollar and US bonds, or ETF applications are approved, causing the correlation to at least turn negative in some countries, this may create a small bull market. But I think a major bull market may require more patience. If it is strategic long-term investment, just stick to dollar-cost averaging, there is no need to judge the bull and bear market in the short term, and it is important to maintain the right mindset."
Daniel Wang is a staunch long-term investor, and this mindset is also reflected in Taiko's development strategy. According to Daniel Wang, Taiko has now launched five testnets, testing different Layer2 network protocol designs, economic models, proof systems, multi-hop cross-chain bridges, and other design elements. They are currently patiently waiting for EIP4844 to go live, and after that, they will launch one or two more testnets, so the mainnet launch should not be far off. Taiko is a ZK-Rollup equivalent to Ethereum, aiming to expand Ethereum through a decentralized, permissionless, and secure Layer2 architecture that supports all EVM opcodes, and is considered a rising star in the Layer2 space.
The head of the first "modular blockchain," Celestia, is even more determined in the track they are deeply cultivating, stating, "We believe in modular blockchains, and this category will drive crypto innovation for the next decade."
OKX Ventures researcher Kiwi maintains an optimistic outlook on the development trend of the crypto industry in the second half of the year. He believes that although the global macroeconomic situation is currently uncertain, when the traditional financial system becomes more volatile, people may be more willing to hold and use cryptocurrencies. In addition, on-chain activity continues to increase, with the number of addresses and users on various chains steadily growing. For example, the cumulative number of Bitcoin addresses is approximately 1.2 billion, with around 1 million active addresses. The on-chain application ecosystem is thriving, and Ethereum has completed the Shanghai upgrade, with the Cancun upgrade imminent. Rapid construction of various infrastructure is a positive sign for the industry. In addition, if the expectation of Bitcoin halving is combined with the expectation of the approval of a Bitcoin spot ETF, it may trigger a huge demand from institutions.
Kiwi states that on-chain transaction volume, active addresses, and miner fees can reflect the strength of market activity and the behavior of participants, and these fundamental data have important value for discovering projects, identifying trends, and making judgments. In addition to on-chain data such as transaction volume, active addresses, miner fees, network hash rate, and token supply, he is relatively more concerned about developer activity data, including code submissions and new releases, which demonstrate the vitality of projects and their future development prospects.
The head of dappOS states, "As inflation issues become more apparent, the younger generation will turn to cryptocurrencies. In the future, Web3 and blockchain applications will enter people's daily lives, and dappOS is an intent-centric operating protocol designed to make dApps as user-friendly as mobile applications. I always maintain an optimistic outlook on the crypto industry. The biggest beneficiaries during a bull market are those who stood firm at the bottom of the bear market. Patience and discipline are two key factors in weathering a bear market. In addition, continuous learning is very important. New things happen in the Web3 industry every day. Asking questions, reading articles, listening to industry professionals and KOLs, continuously paying attention to on-chain data, and forming your own opinions will help you see market trends ahead of others."
Through discussions with these high-quality projects and institutions, two key words can be accurately distilled: "optimism" and "long-term." They always adhere to deep cultivation, continuous learning, and being friends with time. In the future, the younger generation of the new era will be a key group for the adoption of applications in the crypto industry.
Conclusion
No matter what happens, the trend of Bitcoin and the crypto market is still upward, driving endless innovation in the industry, achieving financial democratization, awakening individual sovereignty consciousness, returning data rights, protecting privacy, transforming trust, and even changing the direction of the development of the Internet. This is already cool! And what we need to do is "participate and enjoy freedom on the side."
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