In a thread shared with his 538,000 followers on X, cryptocurrency analyst Miles Deutscher overview of the most essential events retail investors are key to the durability of the crypto bull market. To understand a possible crypto bull run, Deutscher believes it is indispensable to understand what has happened in recent years. Deutscher recalls the significant rally from March 2020 to November 2021, highlighting the extreme gains made in various altcoins.

Understanding the Dynamics of the Crypto Bull Run

“From March 2020 to November 2021, the cryptocurrency market surged 2,672%, with many altcoins reaching multiples of 50-100x+,” Deutscher states, pointing to a period characterized by significant financial stimulus and heightened public interest due to global lockdowns. However, the glory days were short-lived, Deutscher noted, marking a market peak in November 2021, followed by a acute decline.

The downward spiral was exacerbated by the collapse of LUNA and UST in May 2022, which not only wiped out significant market value but also deepened the decline in the broader crypto market. “Crypto technically peaked in November 2021. But it wasn’t until May 2022 that crypto received its final blow: the collapse of LUNA and UST,” he explained, illustrating the uncertainty of cryptocurrency investments during that period.

The fallout from these events led to a widespread exodus of retail investors who were either financially devastated or disappointed by the dramatic declines. “If you were financially burned, you left. If you weren’t financially burned, you left anyway (price/time capitulation),” Deutscher explains, capturing the deep-seated anxiety that permeated the retail investor base after the market crash.

Despite the challenging environment, 2023 brought a fresh wave of optimism with significant institutional moves, most notably BlackRock’s filing for a Bitcoin spot ETF in June, which was later approved. “On June 16, BlackRock filed for a Bitcoin spot ETF […] “This not only signaled a positive catalyst on the horizon, but also a paradigm shift in how BTC was viewed by mainstream institutions,” Deutscher emphasized, pointing to a critical juncture that potentially marked the beginning of a fresh era for Bitcoin and perhaps the broader cryptocurrency market.

Since January 2024, the cryptocurrency market has seen bitcoin prices rise, reaching fresh all-time highs following the successful launch of the ETF. “More than $17 billion has flowed into spot BTC ETFs this year,” Deutscher notes, underlining the significant impact of institutional investment on bitcoin valuations and broader market sentiment.

However, Deutscher is tempering expectations for the altcoin market, which has not seen similar success. Deutscher attributes the lack of a similar altcoin rally to fresh market dynamics introduced by ETFs, which have disrupted classic liquidity flows and investment patterns. “The main driver of this cycle has been the BTC ETF. This is very different from the previous cycle, where the main driver was macroeconomic conditions,” he notes.

When will Bull Run return?

Looking ahead, Deutscher speculates on the conditions that could encourage retail investors to return. He emphasizes the key role of Bitcoin reaching fresh all-time highs, suggesting that Bitcoin reaching or exceeding $100,000 could ignite renewed interest across the cryptocurrency sector. “Yes, many of the aforementioned issues, such as altcoin dispersion, would still exist, but it would certainly bridge some of the cracks. BTC rally = media attention, people leading the altcoin rotation, renewed optimism,” he added.

Deutscher also emphasizes people’s natural inclination to gambling, noting that the thrill of high returns could quickly draw retail investors back into the market if altcoins show consistent gains. He cited the Pareto principle to remind advocates that significant market gains often come tardy in an investment cycle.

“80% of bull market gains come in the last 20% of the move. Retail is joining the fun late. We may just be too early (in terms of cycle length, we’re still relatively early),” Deutscher says.

He further points to the potential of emerging technologies in AI, gaming, and decentralized finance (DeFi) to create compelling fresh apply cases for cryptocurrencies, suggesting that just a few successful applications could lead to widespread adoption, fostering a more sustainable interest in the cryptocurrency market.

For that reason, Deutscher remains bullish on the return of retail investors. He concludes, “So, to sum it up, yes, retail is (mostly) gone. There are good reasons for that, and this cycle is fundamentally different because of them. But it doesn’t take much for retail to come back. And that day may come sooner than you think.”

At the time of going to press, the BTC price was $59,650.

Featured image created with DALL.E, chart from TradingView.com