The co-founder and chief investment officer of digital asset investment firm BlockTower Capital says conditions look ripe for crypto to keep trending higher in the medium term.

Ari Paul says on the media platform X that while he’s not certain about how the macro side will play out in the next three months, he notes that crypto-specific indicators look favorable for the digital asset market.

The BlockTower Capital executive highlights that crypto is currently not flashing signs of elevated hype and speculation, suggesting that the markets are in a position for bullish continuation.

“On the crypto ‘idiosyncratic’ side, we see very low leverage levels, neutral sentiment, and healthy market positioning.

I think the pattern matching of the ETF (exchange-traded fund) approval to previous events like the 2017 futures listing are bad analogies; all of those comparable events occurred far later in the bull cycle in the context of far greater bullish leverage and hype. In my opinion, we’re in a medium time frame bull trend, prices likely higher in six months.” 

Looking at the basic economics side of crypto, Paul says demand coming from institutional investors and new users is more than enough to gobble up supply entering the markets.

“We’re currently in a market dynamic of slow institutional adoption and new user onboarding. There are also daily outflows from mining, exchange fees, hacks, etc.

All of the ‘overhangs’ that I’m aware of for BTC and ETH are fairly light (like Celsius ETH holdings being liquidated). I think very likely demand keeps overwhelming it with similar dynamics to the past 12 months. Something like Solana is arguably trickier given how much FTX estate has to liquidate.” 

According to Paul, crypto is currently following a bull market cycle typically witnessed in stocks and bonds as he thinks insiders and institutions are loading up on digital assets before triggering the big surge.

“I’d say: bull cycles follow a common pattern that starts with insider buying then institutional, then retail. I think we’re in early-mid institutional based on fund flows and adoption metrics. The 4th inning of a nine-inning bull cycle. So unless we get a ‘shock,’ I expect us to move through the next five innings of a bull cycle.” 

Paul also says that crypto does not necessarily need a new catalyst to keep moving higher, saying that the prevailing uptrend is enough to fuel more rallies.

“From a technical analysis perspective, we’re in a medium time frame bull trend, so no catalysts are necessary if I’m right in assessing the current dynamic.

A little like gravity in Einstein’s formulation – with no force, the natural path is for objects to follow a curved spacetime. In markets, if you’re in a bull trend or bear trend, then absent catalysts, the best bet is that the trend will continue for at least the next incremental time unit.” 

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• Source: https://dailyhodl.com/2024/01/31/higher-prices-incoming-for-crypto-as-markets-see-institutional-adoption-and-new-user-onboarding-says-ari-paul/