Markets
4 catalysts that could spur the next crypto rally
- Bitcoin increased by more than 60% in 2024, driven by that of January. ETF spot approval and the recent halving event.
- Developers have been working to add features to the Bitcoin network that could drive prices higher.
- The red-hot crypto could also benefit from interest rate cuts, easing regulations, and the November election.
Thanks for recording!
Access your favorite topics in a personalized feed on the go. download the app
By clicking “Register”, you agree to our Terms of use And Privacy Policy. You can unsubscribe at any time by visiting our Preferences page or clicking “unsubscribe” at the bottom of the email.
Bitcoin achieved records this year thanks to two catalysts: that of January ETF spot approvaland the recent halving event. The red-hot crypto is up more than 60% year-to-date as of Friday, trading about 6% off all-time highs hit in March.
Even if the two pilots should keep raise the price of bitcoin, they are now in retreat and investors are wondering where to look for more upside potential. According to analysts, there are many ways for the price of Bitcoin to continue to rise.
Below are four upcoming catalysts:
1. Lower interest rates
Investors are focusing on the Federal Reserve’s rate cut prospects, anticipating a rebound in stocks as a result. The same dynamic applies to bitcoin, which trades as a speculative asset that appreciates when borrowing costs are lower.
In fact, it was largely the extremely low interest rates of 2021 that pushed Bitcoin at a record this year. The recovery then reversed course when the Fed launched its monetary tightening campaign.
“In the first quarter, we saw a halving, but more importantly a massive adoption of ETFs. So as that is factored in, you’re now looking at what the Fed can do,” said Mike Novogratz, CEO of Galaxy. told Bloomberg earlier this month.
Until short-term interest rates fall, bitcoin will likely stay in a range between $55,000 and $73,000, he said.
2. Changing regulations
At this point, the crypto community is also looking for consistency on the regulatory front, which has proven to be a frequent obstacle for bitcoin. For example, the possible approval of spot ETFs by the Security and Exchange Commission was preceded by a loss in court.
But legal sentiment around crypto appears to be adjusting. A Future Bitcoin Catalyst Could Be Imminent stablecoin bill, Oppenheimer executive director Owen Lau told CNBC in early May. It could happen as soon as this year.
Meanwhile, the US House of Representatives just passed a wide-ranging regulatory framework for the crypto industry, which is being hailed as a victory for the sector. Although its fate is unclear in the Senate, it would provide the cryptosphere with clearer rules.
3. November election
But real regulatory clarity will come after the presidential election, Novogratz said. He noted that Republican candidate Donald Trump was a growing voice in support of the industry, in contrast to President Biden’s policies.
In a May note, Geoff Kendrick of Standard Chartered also said that a Trump victory would be largely positive for Bitcoin.
He added that growing concern around U.S. Deficit and Debt Trends This will also likely boost Bitcoin as investors start looking for alternative investments. That could happen under both candidates because neither has offered a plan for how to manage government spending, Kendrick said.
4. Expanded use
As the outlook on bitcoin evolves, the cryptocurrency itself is undergoing something of an overhaul.
According to Bloomberg, developers have been working hard to add features to the Bitcoin network. These efforts aim to make crypto more than just a speculative asset to hold and, with projects coming online quickly, could offer another catalyst.
For example, the recently released Ordinals protocol allows users to store more than just bitcoin on the BTC blockchain, but start trading assets such as non-fungible tokens. Already, the ordinals market has seen daily trading volume reach $3.42 million in mid-May, said Gracy Chen, Bitget’s chief executive officer. written the.
“The advent of ordinals on Bitcoin in 2023, the subsequently created BRC-20 token standard, and now the Runes token standard, have helped spark interest in viewing Bitcoin as a network of platforms, and not just as a monetary network.” Galaxy wrote in a note. And today, such projects are attracting considerable attention from venture capitalists, the statement added.