Author: Daniel Ramirez-Escudero, CoinTelegraph; Compiled by: Deng Tong, Golden Finance

As people speculate more and more, incoming President Donald Trump may first Days of signing an executive order declaring a Bitcoin reserve, or passing legislation to establish a reserve during his term, many are wondering whether the move could lead to a cryptocurrency supercycle.

Since Wyoming Senator Cynthia Lummis introduced a Bitcoin reserve bill earlier this year, states such as Texas and Pennsylvania have introduced similar proposals. Russia, Thailand and Germany are reportedly considering proposals of their own, further increasing pressure.

If countries race to protect their Bitcoin stocks, will we say goodbye to the four-year boom-bust cycle in cryptocurrency prices?

Iliya Kalchev, an analyst at cryptocurrency lender Nexo, believes that "the Bitcoin Reserve Act may be a landmark moment for Bitcoin, marking its "recognition as a legitimate global financial instrument."

“Every Bitcoin cycle has a narrative that tries to push the idea that ‘this one is different. Conditions have never been better. The cryptocurrency space has never had a pro-crypto U.S. president control the Senate and Congress. ”

The Bitcoin Act of 2024 proposed by Lummis would enable the United States to include Bitcoin as a reserve asset in its treasury, purchase 200,000 Bitcoins per year within five years, and accumulate 1 million Bitcoins, and held for at least 20 years

Strike founder and CEO Jack Mallers. believes that Trump "may use the first-day executive order to buy Bitcoin," although he warned that this is not equivalent to buying 1 million Bitcoins

The US bill supports Bitcoin. Dennis Porter, co-founder of the non-profit organization Satoshi Act Fund, also believes that Trump is exploring the activation of a Bitcoin strategic reserve through executive order.

Dennis Porter announced that Trump is working on an executive order for a strategic Bitcoin reserve. Source: Dennis Porter

So far, Trump’s team has not directly confirmed Regarding the executive order, Trump was asked on CNBC whether the United States would establish a BTC reserve similar to the oil reserve (which may mean legislation)

However, the executive order lacks stability, Because subsequent presidents have frequently reversed such orders, the only way to ensure the long-term future of Bitcoin’s strategic reserve is by gaining majority support.supportive legislation.

With Republicans dominating Congress and holding a slim majority in the Senate, Bitcoin advocates on Trump’s team have a solid base to push Loomis’ bill. However, only a handful of Republican defectors could derail the bill amid growing outrage at handing their fortunes to Bitcoin supporters.

U.S. Senate and Congressional results following the 2024 elections. Source: Associated Press

“Stop comparing this cycle to previous cycles”

Earlier this month, Alex Krüger, an economist and founder of macro digital asset consultancy Asgard Markets, said the election results He believes that "Bitcoin is most likely in a super cycle."

He believes that Bitcoin’s unique situation can be compared to gold, when former US President Richard Nixon took the United States off the gold standard, ended the Bretton Woods system, and the price of gold dropped from 1971 per cent An ounce soared from $35 to $850 in 1981.

Krüger does not rule out the possibility that Bitcoin will experience a bear market like in past cycles. However, he urged cryptocurrency investors to “stop comparing this cycle to previous cycles” as this time may be different.

Trump’s actions thus far certainly point to a favorable outlook for the future. He nominated pro-cryptocurrency and pro-deregulation Paul Atkins to serve as Securities and Exchange Commission chairman following the resignation of Gary Gensler.

He also nominated pro-cryptocurrency Scott Bessent as Treasury Secretary and former PayPal COO David Sacks to serve on artificial intelligence and cryptocurrencies. Czar, responsible for establishing a clear legal framework for the cryptocurrency industry.

The super cycle theory has never had super results

However, the concept of “this cycle is different” has appeared in every past Bitcoin bull run, each time gaining momentum around mainstream and institutional adoption Narrative support.

During the bull market of 2013-2014, the super cycle theory was supported by the theory that Bitcoin would gain international attention as an alternative asset to fiat currencies.

In the 2017-2018 cycle, rapid price appreciation was considered a sign of mainstream financial adoption and the beginning of Bitcoin's mainstream acceptance, and institutional interest would flourish.

In the 2020-2021 cycle, when technology companies such as MicroStrategy, Square, and Tesla enter the Bitcoin market, they believe that many technology-related companies will follow suit.

Bitcoin’s price performance has seen peaks and lows in previous cycles. Source: Caleb & Brown

In each cycle, however, the supercycle narrative failed to materialize, ultimately causing prices to plummet and wipe out supporters as they entered a secular bear market.

Su Zhu, co-founder of Three Arrows Capital, is the most famous supporter of the super cycle theory since 2021. He believes that the encryption market will continue to be in a bull market and there will not be a sustained bear market, and Bitcoin will eventually reach Peak of $5 million.

Three Arrows certainly borrowed money as if the supercycle theory were real, and when it was finally liquidated, the cryptocurrency market cap fell by nearly 50% after the news broke, leading to a collapse that included Voyager Digital Bankruptcies and financial difficulties among lenders including , Genesis Trading and BlockFi.

So, super cycles are a dangerous theory to bet your life savings on.

For Chris Brunsike, a partner at venture capital firm Placeholder and former head of blockchain product at ARK Invest, the Bitcoin supercycle is just a myth.

“The super cycle is undoubtedly a collective delusion.”

However, given the support of the US President, the US election results overwhelmingly provide an unprecedented and extremely bullish situation for Bitcoin. conditions, while the U.S. president appears to be following through on his pledge to support cryptocurrencies, which includes never selling Bitcoin from U.S. Bitcoin inventories.

Potential global domino effect

If the Bitcoin Reserve Act is passed, it may trigger a global race to hoard coins, with others following suit to avoid falling behind.

Attorney George S. Georgiades, who switched from advising Wall Street firms on financing to working with the cryptocurrency industry in 2016, told Cointelegraph that enacting the Bitcoin Reserve Act “could mark a turning point in global Bitcoin adoption,” And could “trigger other events” for countries and private institutions to follow suit, driving wider adoption and increasing market liquidity. ”

Basel Ismail, CEO of crypto investment analysis platform Blockcircle, agreed, saying that the approval would be “one of the most optimistic events in the history of cryptocurrencies” because “it will trigger a race to the bottom.” A race for possibly more Bitcoins."

"Others will not have a say, they will be forced to take action. Either pivot and compete or die. ”

He believes that “most of the G20 countries will follow suit and build their own reserves.” ”

2024 G20 map. Red: G20, purple: EU representatives, green: African Union representatives. Yellow: Permanently invited. Source: Wikipedia

Veteran crypto investor and Bitcoin educator Chris Dunn noted that this FOMO-based competitive buying frenzy between countries could completely change the current crypto market cycle.

“If the United States or other major economic powers begin to accumulate Bitcoin, Bitcoin could trigger FOMO, which could create market cycles and supply and demand dynamics unlike anything we have seen to date. .”

Others may be ready for such a competition, the OKX exchange president noted.

“Game theory may well have quietly come into play.”

However, Ismail said that most Bitcoin purchases will be done through over-the-counter brokers and settled in the form of block trades , so “it may not have an immediate, direct impact on the price of Bitcoin,” but will create a long-term impact. Persistent demand forces will ultimately drive Bitcoin’s price higher.

A new wave of cryptocurrency investors could change cryptocurrency market dynamics

If countries become market buyers, the Bitcoin market could undergo fundamental changes. A new wave of new investors from global financial centers will flood into the cryptocurrency market, changing market dynamics, psychology and reactions to certain events.

Nexo analyst Kalchev said that while it remains speculative to assume that the legislation could disrupt Bitcoin’s well-known four-year halving cycle, some dynamics could change.

Bitcoin is a unique market that has so far been driven by retail buying and selling, with prices highly sensitive to market psychology. The emergence of new types of investors may change market dynamics and alter historical cycles.

Ismail believes that "stock market investors will behave differently from retail investors who overreact." Institutional investors have deep pockets and advanced risk management strategies that allow them to treat Bitcoin differently than retail investors.

“Over time, Wall Street’s involvement may help create a more stable, less reactive market environment.”

Stability is another alternative to less volatile This logically means that bear markets will be less aggressive than past cycles.

Georgiades believes that "price cycles will persist," but "continued demand from large buyers such as the United States may reduce the volatility and volatility we have witnessed in past cycles."

Ismail also pointed out that the performance of the Bitcoin market has been different from the previous four-year cycle. The price of Bitcoin in the current cycle fell below the previous cycle’s all-time high (ATH), which “everyone thought was impossible” before Bitcoin’s official halvingNew ATH reached.

“The four-year cycle has now been debunked and broken many times.”

Bitcoin has only experienced four halvings so far, and there are nearly thirty halving events yet to come. occur. “It’s hard to imagine that all of these halvings will follow the same predictable four-year pattern,” Kalchev said, especially as broader macroeconomic and factors such as central bank and regulatory developments have a more significant impact on Bitcoin’s market trajectory. When affected.

Kalchev believes that Bitcoin’s price trend will no longer be affected by internal mechanisms such as halving, but more by external factors, such as institutional adoption and geopolitical events.