A potential wave of spot Bitcoin exchange-traded funds, PayPal’s new stablecoin, and a key Ethereum upgrade are among the catalysts that could stir the crypto market from its recent slump. After a promising start to 2023, the past five months have seen a lack of momentum in the price of Bitcoin and other cryptocurrencies, prompting Galaxy Digital CEO Mike Novogratz to label the markets “lackadaisical” in June.
However, industry analysts are optimistic about several upcoming developments that could inject fresh energy into the crypto space. Henrik Andersson, Chief Investment Officer at Apollo Crypto, believes there is a good chance of spot Bitcoin ETFs receiving regulatory approval within the next six months. He points out that institutional acceptance of cryptocurrencies continues to rise and that the era of central banks tightening monetary policy may be behind us. According to Andersson, the recent pause in rate hikes suggests we have reached the end of the hiking cycle, which is positive for the crypto market. Additionally, he sees PayPal’s stablecoin launch and the potential incorporation of crypto payments by Twitter (referred to as “X”) as bullish indicators for future crypto adoption.
Markus Thielen, head of research at Matrixport, another crypto financial services platform, shares Andersson’s optimism about spot Bitcoin ETFs but also highlights the upcoming Ethereum upgrade as a catalyst to watch. Thielen believes two significant factors will support Bitcoin and Ethereum prices by the end of the year: the potential approval of a US-listed physical Bitcoin ETF by the Securities and Exchange Commission (SEC) and Ethereum’s EIP-4844 upgrade, set to take place in Q4 2023. The Ethereum upgrade will introduce a mechanism called proto-danksharding, which aims to reduce fees and improve transaction throughput on the network.
In the short term, market analyst Tony Sycamore from trading firm IG advises investors to keep an eye on the minutes from the Federal Reserve’s last meeting. The release of the minutes on August 16 will shed light on the Fed’s decision to keep interest rates unchanged. Specifically, Sycamore suggests that Bitcoin investors should monitor US stock markets for signs of stabilization, as well as the interest rate market, with a focus on yields, which have been increasing over the past four weeks.
The current market conditions for Bitcoin have been characterized by a range-bound channel with prices oscillating within a $6,000 range since mid-March. Resistance around the $31,000 level has proven strong, leading to multiple failed attempts to surpass it, while support has been found around $25,000 during the market dip in mid-June. Additionally, the crypto market has suffered from record lows in volatility as liquidity and trading volumes have dwindled in recent months.
In conclusion, industry experts foresee several catalysts that could potentially revive the crypto market. The approval of spot Bitcoin ETFs, the launch of PayPal’s stablecoin, and Ethereum’s upgrade are all anticipated events that could inject renewed enthusiasm and activity into the crypto space. Investors are advised to closely monitor these developments as they could be instrumental in shaping the future trajectory of cryptocurrencies.
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