Author: Phoenix Capital Management

Sep, 2023

This bear market has lasted longer than we anticipated. We are asking ourselves on a daily basis when and how the next bull market will arrive, and even more importantly, whether there will ever be a serious bull market like those the industry has experienced in the past.

Therefore we have decided to initiate a new series of articles where we take an absolute subjective point of view to analyze the potential mega thesis for the next bull market.

<aside> 🔑 A deep and quantitative dive into the most common belief in crypto: Bull will be here again when the Fed starts printing money.

TL;DR

• While another easing cycle is inevitable, it's essential to note that the unprecedented easing cycle that fueled the bull market during COVID was the largest in history. A repeat of such magnitude is unlikely.
• The next macro easing cycle is likely to be less than half as potent as the previous one and remains a distant prospect.
• Crypto is significantly larger now. If assuming a further 20% decline, it’s still ~2.5x the size of 2020-Feb.
• An inaccurate but illustrative calculation: 0.5x size of an easing cycle + 2.5x size of a market → <20% strength compared to the last cycle.
• Don’t put too much hope on a macro-driven bull market. We need better products. </aside>

It is evident that the significant "money printing" (a combination of rate cuts, QE, and fiscal stimulus) was among the key drivers of the last bull market, not just in crypto, but in all risky assets.

The money printer has stopped. But macro easing is still the most accepted hypothesis for the next bull market. Most people believe the statement that if the Fed begins to print money again, we’ll definitely have another bull market, no matter what blockchain technology will be like at that time.

This article will investigate this hypothesis.

Table of Content

1. The Last Cycle: An Unprecedented Easing

1.1 Massive crisis

To grasp the enormity of the easing in the last cycle, we need to comprehend the severity of the economic crisis caused by COVID.