Bitcoin Bear Market Debate: Does a 40% rally start a new bull market?

TLDR: Does Bitcoin's rebound signal a new bull market?

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TLDR: Bitcoin rebounded nearly 40% from its late June low, reigniting the bull and bear market battle. Didier believes that Bitcoin's return to its 200-day moving average is an early sign of a new bull market. Griffin said the bear market will continue until the signals of dollar liquidity and government bond yields become clearer. Strategy's STRC is perpetual preferred stock rather than traditional debt, easing concerns about forced default.

Bitcoin rebounds about 40%: Is the bear market over?

Bitcoin has climbed about 40% from a low at the end of June, a rise that has sparked a new round of debate about whether the bear market is over. In a recent podcast, investor didier and portfolio manager Griffin Ardern had a clear divergence of views on this. Didier believes this is the beginning of a new bull market, while Griffin says the bear market is not over yet.

Does Bitcoin's rebound signal a new bull market?

Bitcoin climbed above $81,000 after briefly falling below $58,000 at the end of June. Didier said the increase marked the beginning of a bull market. "My view is very clear: this is a bull market, either at the beginning or at a very early stage," he said. He pointed out that Bitcoin's return to the 200-day moving average is the clearest signal. Griffin objected to this, believing that it is still in the middle and late stages of the bear market and that there is still some way to go before the real bull market starts. He added that the rally reflected short squeeze after weeks of light trading and compressed options volatility.

Both guests agreed that before the rebound began, the market was generally in a low allocation or short allocation. Concerns about fiscal credibility have also prompted funds to flow to Bitcoin. Griffin pointed out that the rise in U.S. Treasury issuance poses a risk to sovereign credit. Didier said financing costs of more than 5% were unsustainable for the current debt burden. As yields approach 4.7% to 5%, he expects investors to open positions early. Griffin insists that a true bull market requires clearer liquidity conditions and government bond yield signals before the bear market stage ends.

Strategy's balance sheet adds new variables to the debate

The discussion turned to Strategy, a Bitcoin corporate holder led by Michael Saylor, and its movements became a factor in the sustainability of the rally. Didier explained that Strategy's preferred stock product, STRC, is perpetual preferred stock rather than traditional debt. He said he initially mistakenly thought that STRC was similar to perpetual bonds, but the terms stated otherwise. Strategy holds approximately $6.7 billion in convertible bonds, some of which will enter the repayment window this year. Didier said the company is increasing its cash reserves through stock ATM issues and preferred stock issues to cope with the pressure. Didier outlined three priorities in Strategy's decision: first, support the Bitcoin price, because the higher the price, the more likely the bond is to be converted into equity; second, maintain the premium on Strategy's common stock; and third, push the STRC price back to around $100. Griffin said Bitcoin is increasingly trading like a separate macro asset, which means Strategy's own problems will not necessarily reverse the rally or confirm a return to the bear market. He believes Strategy is now more like an asset management company.

Does funding rotation from AI support bullish views?

Both guests discussed whether the rotation of funds from crowded artificial intelligence transactions could prolong Bitcoin's rebound. Didier said that many investors focused on AI are anxious about their current positions and are considering reconfiguring crypto assets, and few currently hold significant exposure to crypto assets. Didier points out that short-term capital cannot tolerate months of poor performance as long-term capital. If there is a correction in AI and gold and cryptocurrencies rise, funds may flow in the direction of less resistance. After a massive liquidation, positions in crypto assets have now become clean. Looking further into the future, Didier said he does not believe AI will permanently siphon money away from the blockchain space. His belief that autonomous machines will ultimately require the machine-native financial infrastructure, and blockchain can fill this role supports his bullish view. Griffin analyzes it from both technical and financial levels. He said that AI has indeed attracted talent from the crypto field, but in terms of finance, the crypto field continues to make progress. He pointed to steady progress in payments, transactions, compliance and risk management since 2020.