Glossary

Supercycle

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In economics, a "supercycle" describes an extended period characterized by the outsized growth of a particular asset or sector.

What Is a Supercycle in Crypto?

In economics, a "supercycle" describes an extended period characterized by the outsized growth of a particular asset or sector. Unlike a typical short-term bubble fueled by hype and speculation, supercycles indicate a major shift underpinned by strong fundamentals over many years. 

Are We Entering a New Crypto Supercycle?

Multiple metrics indicate crypto has graduated from a speculative asset to an emerging megatrend. Unlike past crypto rallies reliant on hype and presale ICO tokens, the current enthusiasm finds support in actual adoption. 

The number of Bitcoin active addresses has continued to grow throughout the decade, definitively signaling broadening acceptance. 

At the same time, mainstream financial institutions like investment banks, asset managers, hedge funds and mutual funds are finally embracing crypto as an investable asset class after years of skepticism. Major banks have introduced or plan to offer custodial services to securely manage clients' crypto holdings in response to surging demand. BlackRock, JPMorgan Chase and Goldman Sachs aim to let wealth management clients gain crypto exposure. 

Similarly, crypto ETFs also experienced massive early success, attracting over $4 billion shortly after launching.  

Overall, the long-term trajectory continues skewing upwards on metrics ranging from developer participation to Layer 2 infrastructure buildout.

Macro environment tailwinds also support the growing narrative of an impending supercycle spanning the entire decade. Unprecedented spending by governments worldwide since 2020 has stoked fears of currency devaluations and inflation down the line – scenarios that cryptocurrencies directly hedge against. Hordes of retail and institutional capital may rotate into crypto safe harbors if even mild inflation materializes, rapidly propelling prices upwards. 

How Has Crypto's Narrative Consolidated Around Bitcoin as "Digital Gold"?

Over the last market cycle, Bitcoin has cemented itself as the apex cryptocurrency, with its hardcoded monetary properties garnering comparisons to a digital version of the precious metal.

Bitcoin's narrative as the digital store of value mainly stems from verifiable scarcity rooted in underlying protocol design. The code caps supply at 21 million BTC, enabling it to act as a hedge against inflation, similar to gold. However, Bitcoin's natively digital nature also allows superior portability, security, and transactional efficiency. These useful monetary properties attracted early adopters. 

El Salvador even approved Bitcoin as a legal tender in 2021 against a backdrop of concerns over dollar dependency, showing real-world use cases emerging. Globally, the increasing adoption of Lightning Network continues enabling regular transactions in BTC beyond just a "digital gold" stored for its future value.