Bitcoin CEO Warns of Insidious Bear Market Despite $118,000 High

Seamus Rocca, CEO of Xapo Bank, has issued a warning about the cyclical nature of Bitcoin, asserting that the cryptocurrency is still subject to its quadrennial cycle despite recent institutional adoption and new all-time highs above $118,000. Rocca believes that the next bear market could occur insidiously, triggered by a simple slowdown in crypto news rather than a catastrophic event.

Rocca's stance is notable given the current landscape, where US spot Bitcoin ETFs have seen significant net inflows, and major institutions like BlackRock hold substantial amounts of Bitcoin. However, Rocca argues that these advancements do not negate the cyclical nature of Bitcoin, which has been driven by human psychology for over fifteen years. He contends that the market will continue to experience waves of euphoria and panic, regardless of technological or regulatory developments.

Rocca's analysis is supported by Aleksandar Svetski, author of The Bushido of Bitcoin, who also anticipates a similar boom and crash cycle. Additionally, the high correlation between Bitcoin and traditional stock markets, such as the S&P 500, indicates that Bitcoin is still considered a speculative and high-risk asset, far from being a definitive safe haven.

Rocca warns of an insidious scenario where the next correction could be triggered by a simple lack of news or developments in the market. This organic collapse could catch investors off guard, as there would be no identifiable catalyst. A slowdown in media interest or portfolio rebalancing could be enough to initiate a downward spiral. The venture capital firm Breed adds that companies heavily invested in Bitcoin through debt could exacerbate this situation, potentially leading to a domino effect.

However, Breed's analyses also suggest that if companies continue to finance their Bitcoin purchases primarily through equity rather than loans, the contagion could remain limited. This offers a glimmer of hope in an otherwise concerning outlook. Rocca advises investors to prepare for the eventuality of a cyclical correction, as the next collapse could occur without warning, marking the end of the current euphoric phase for Bitcoin.