Bitcoin and cryptocurrency investors are eagerly expecting bitcoin’s next breakout—if it ever comes.
The bitcoin price, on target to be one among the year’s best performing assets, remains faraway from its all-time high of around $20,000 set in late 2017.
Now, Silicon Valley risk capital firm Andreessen Horowitz has forecast a “fourth crypto cycle” might be on the horizon—potentially sending the bitcoin price sharply higher.
“The 2017 cycle spawned dozens of exciting projects during a wide selection of areas including payments, finance, games, infrastructure, and web apps,” Andreessen Horowitz partners Chris Dixon and Eddy Lazzarin wrote during a blog post.
“Many of those projects are launching within the near future, possibly driving a fourth crypto cycle.”
Last month, Andreessen Horowitz announced its second $515 million bitcoin and crypto fund, adding to the $300 million fund it launched in mid-2018.
The 2020 fund raising smashed the first $450 million target and can be dedicated to cryptocurrency and blockchain projects—specifically decentralized finance, next-generation payments and therefore the decentralized internet.
“Even though crypto cycles look chaotic, over the future they’ve generated steady growth of latest ideas, code, projects, and startups—the fundamental drivers of software innovation,” Dixon and Lazzarin wrote, adding “people who’ve been in crypto for an extended time view the space as evolving in cycles, alternating between periods of high activity and ‘crypto winters.'”
The VC firm identifies an “underlying order” to the primary three 2011, 2013 and 2017 bitcoin and crypto cycles. First, the worth of bitcoin and other cryptocurrencies rises, resulting in new interest and social media activity.
New users become involved , contributing new ideas and code and creating projects and startups. These product launches inspire more people, “eventually culminating within the next cycle.”
The bitcoin and crypto price-innovation cycle model is predicated on anecdotal evidence and data, consistent with Dixon and Lazzarin.
“Anecdotally, of the many conversations with crypto founders we’ve had, we frequently hear stories like: ‘I heard about crypto in [2011, 2013, 2017] when the costs spiked and everybody was talking about it. At first, i assumed it had been almost money, on the other hand I started reading white papers and blog posts, learned more about the potential of the technology, and eventually fell crazy with it.'”
The firm has also “analyzed 10 years of knowledge , including Reddit comments in crypto subreddits, Github commits in crypto repos, and Pitchbook funding data.”
Meanwhile, the bitcoin and cryptocurrency community remains readjusting following a planned supply squeeze that saw the amount of latest bitcoin being created cut by half.
Earlier this month, the amount of bitcoin rewarded to people who maintain the bitcoin network, called miners, was cut by half—dropping from 12.5 bitcoin to six .25.
Many had warned the bitcoin price could crash within the aftermath of the third halving but most analysts seem confident the bitcoin price will climb eventually.