The cryptocurrency market experienced an explosive rally between March 2020 and November 2021, with Bitcoin and altcoins reaching unprecedented heights.

During this period, Bitcoin surged by over 2,600%, while several altcoins like Solana (SOL), Fantom (FTM), Avalanche (AVAX), and Terra (LUNA) posted gains of 500x or more.

According to a recent post by renowned crypto analyst Miles Deutscher on X, this bull market was fueled by a perfect storm of factors, including aggressive monetary stimulus, lockdowns that kept people at home, and the widespread distribution of economic stimulus checks.

Deutscher noted that however, as with all financial bubbles, the party didn’t last. The market topped out in November 2021, and the subsequent collapse of Terra’s UST and LUNA in May 2022 marked the beginning of a long and painful downturn.

This crash, coupled with the fallout from the failures of firms like 3AC, Celsius, BlockFi, Voyager, and the infamous FTX, eroded investor confidence in the market.

Many retail investors, who had entered the market during the final stages of the bull run, were burned financially and left the market, while others who hadn’t invested at all became more skeptical of the industry.

Given all of these incidents, Miles Deutscher has now weighed in on whether the crypto market can still experience a 2021-style bull run Again.

Will 2021’s Crypto Frenzy Repeat?

In the detailed post uploaded on X on August 28, Deutscher revealed that despite the significant losses and the exit of many retail investors, there are signs that the market may be gearing up for a recovery.

The approval of a Bitcoin spot exchange-traded fund (ETF) by BlackRock, the world’s largest asset manager, in January 2024, has been a “game changer.”

According to Deutscher, the approval signaled to the market that institutional interest in Bitcoin is strong as it triggered a rally that pushed Bitcoin to new all-time highs of $73,000.

However, despite Bitcoin’s strong performance, Deutscher highlighted that altcoins have not followed suit as they did during the 2021 bull run.

The analyst revealed that several factors contribute to this divergence, including the fact that much of the new liquidity is being directed towards Bitcoin ETFs rather than flowing into the broader altcoin market.

Additionally, the sheer number of new altcoin projects has led to a dispersion of liquidity, making it more difficult for individual coins to rally. Another critical factor is the psychological impact of the 2022 crash.

Many retail investors who were burned in 2022 are hesitant to re-enter the market, leading to a lack of fresh capital. Deutscher explained:

Most of the existing market participants are seasoned veterans. Altcoins are viewed as vaporware, people are mistrusting of even well-intentioned project founders (who can blame them). This makes trading extremely PvP, and much more difficult. There isn’t an endless flow of fresh capital to underpin the market, like there was in 2021. We’re all essentially fighting over the same dollars.

What Could Bring Retail Back?

According to Deutscher, for the retail investor to return, several conditions need to be met. First, Bitcoin breaking through new all-time highs could reignite interest in the market, as it did in previous cycles. This, as explained by the analyst could lead to renewed optimism and a potential rotation into altcoins.

Additionally, the speculative nature of the crypto market means that retail investors may return if they see significant gains being made. Lastly, for the market to sustain long-term growth, real use cases for cryptocurrencies need to emerge.

Despite the current challenges, the infrastructure supporting the crypto market has improved significantly since 2021, Deutscher stated, adding:

I’m hopeful that this will facilitate the creation of some killer dApps. Crypto only really needs 2-3 to take off in order to facilitate wide spread adoption.

Overall, the analyst concluded stating that although the next bull run may not be identical to 2021, the potential for significant gains remains if the right conditions are met.