Bitcoin (BTC) heads into the last week of February lower but shows signs of strength as a key support level holds. After a nervous few days on macro and crypto markets alike, BTC/USD is again below $40,000, but signs are already there that a comeback could be what starts the week off in the right direction.

The situation is far from easy — concerns over inflation, Fed’s monetary policy stance and its capability to curb it quickly were suddenly aggravated by malicious geopolitics, and with them, many growth assets including most cryptos remain under huge pressure. Further clues from the U.S. Federal Reserve will be an invaluable asset – especially, in the short term, with March expected to be when the first key interest rate hike is announced and delivered. Otherwise, the disappointed markets will be forced to pull back to aggressive asset-buying, just like how it happens with most commodities.

Although Bitcoin may be struggling at $40,000, fresh data is underpinning the fact that active selling may be over. Data from on-chain analytics firm Glassnode shows that despite price volatility, over 60% of the BTC supply has not left its wallet in a year or more.

According to Glassnode’s HODL Waves indicator, as of Feb. 18, 60.61% of the BTC supply has not been used in a transaction for a year or more:

Bitcoin HODL Waves chart. Source: CoinTelegraph

1. What Vitalik Buterin thinks of situation with Ethereum

In a highly prominent recent interview with Bloomberg, the celebrity co-founder of Ethereum and namesake world’s largest crypto network Vitalik Buterin, said he ostensibly believed that the crypto industry is going to benefit from a downward correction that smells of cold and memories and crypto winter.

“The people who are deep into crypto, and especially building things, a lot of them welcome a bear market,” Buterin said during an interview. “They welcome the bear market because when there are these long periods of prices moving up by huge amounts as it does – it does obviously make a lot of people happy – but it does also tend to invite a lot of very short-term speculative attention.” – Buterin said in that interview (well, to some degree – our remark) “ – but at the same time, such periods attract many speculators and hunters for a quick profit.”

“The “winters” are the time when a lot of those applications fall away and you can see which projects are actually long-term sustainable, like both in their models and in their teams and their people,” he added. Yet Buterin, who said he’s been “surprised” by how erratically the market has moved since last year, isn’t sure whether crypto has entered another winter or “the sector is just mirroring the volatility in broader markets”.

“In winter, many projects die off, it becomes clear who is viable and focused on long-term results, who have reliable teams and stable business models,” he added. Buterin looked also “surprised” by how the market has changed since last year, but he is not sure that another winter has begun in the industry. Perhaps the current dynamics only reflect the volatility in financial markets in general. “It really seems like a switch has been flipped in the cryptocurrency markets and they have moved from a niche group populated by very specific participants and not connected to traditional markets into the category of mainstream assets,” he added. He also believes that the crypto winter will help those who create cryptocurrency projects to focus on improving the technology.

The previous crypto winter occurred in 2018, and since then the sector has flourished. More than 12.5 thousand tokens are registered on the site that monitors the dynamics of prices for cryptocurrencies, and their total market cap constitutes around $1.9 trillion. The inflow of funds in the industry during the last bull market instantaneously enriched some swift-to-act people. In applications created by people who came into the industry only for a quick buck, pump-and-dump scams weren’t, unfortunately, infrequent.

2. What Crypto Exchange Huobi’s Co-founder Du Jun Thinks of Next Bitcoin Bull Cycle

In his turn, co-founder of crypto exchange Huobi Du Jun shared his thoughts on when he thinks the next BTC bull market will occur, stating that his prediction is based on the halving of the leading digital asset. Jun believes in a highly popular notion that there is a cycle every four years that is closely related to BTC halving – and it is usually welcomed and accompanied by a bull market during which Bitcoin cyclically reaches new highs, but after it there is always a calm, marking the arrival of bears – volatility and a strong decline in the value of the leading asset.

He brought a particular example that in 2012, half of the BTC was released into circulation, and in 2013 there was a bull market when the value of the asset rose from $20 to almost $2,000 in 2013. After that there was a bear market. In 2020, the third halving led to a third bull market and a jump from about $3,000 to $70,000.

But generally he admitted that Bitcoin bull market is hard to predict. In addition, the Huobi co-founder admits that it is “difficult to predict” when a bull market will occur, precisely because of the “many factors” that can affect the market. As a result of his hypothesis, he states that “if his assumptions are correct, then we are now in the early stages of a bear market.”

Conclusion

We are at the turning point where accelerating inflation keeps us under constant pressure to act bearing in mind that if the Fed won’t be able to effectively crackdown on it, then our wait-and-see attitude will cost us anywhere between 6 and 10% of our hard-earned money on an annual basis. Once the regulators’ limited capabilities to cope with inflation – since it looks systemic rather than purely cyclical – will be recognized, the much-talked-about “crypto winter” will cease as abruptly as it had started.