Will this mini-crypto bull rally continue?

Investors in the cryptocurrency market are shaking off a bear market for the first time in months, with crypto assets such as Ethereum , Lido and Polygon rising 50% after hitting recent lows. Many are hoping that this is the start of a bull run and that Ethereum will hit new highs, but this may not be the case.

After months of horrific price action, the cryptocurrency market finally started to recover over the past week. Ethereum, which was trading below $1,000 a month ago, has now risen to as high as $1,500. Additionally, Bitcoin recently surged from $19,000 to $23,000. Altcoins have also performed well, with Lido up 131% over the past week.

Some investors believe that the recent rally was caused by the anticipation of the Ethereum merger. The merger marks a change in Ethereum's consensus mechanism from proof of work to proof of stake. This means that Ethereum's energy consumption is expected to be reduced by 99.97%, which is very environmentally friendly and one of the most important events in the history of cryptocurrency.

While the Ethereum merger is undoubtedly a major event, it may not be enough to get us out of the bear market for several reasons. First, the typical cryptocurrency bear-bull cycle is about 4 years long. For example, the last big bull run in cryptocurrencies was in 2017, ended in 2018, and then the next bull run did not start until 2022. This has happened three times.

Second, large technology upgrades have failed to cause other asset prices to surge. Most of the time, the promise of an upgrade is already priced in by the market, and this may be the case with Ethereum. The merger has been in development for several years and has been delayed several times, meaning that anyone who wanted to buy Ethereum before the merger has already done so. This is a huge milestone for the cryptocurrency industry, but it may not cause such widespread excitement among the public that it can pull the $1 trillion market out of a bear market.

Finally, the macroeconomic environment is not ideal for cryptocurrencies. Across the world, countries are preparing for a pullback or possible recession, and current economic conditions are more dangerous than at any time since Bitcoin was created in 2008. Under these new macroeconomic conditions, the cryptocurrency market is heading into uncharted territory. As investors pull out of riskier assets like crypto, the cryptocurrency market could fall to scary lows. On the other hand, Bitcoin may be seen as a hedge against government currencies, and no one really knows what will happen to the financial markets in the coming years.

In summary, this looks like a short-term bull run before the larger market contraction trend continues, mainly due to the macro market environment, but it is unprecedented that the market has recovered so quickly. It also gives investors the opportunity to buy cryptocurrencies at low prices and accumulate a solid portfolio before the real next bull run begins.