It’s no secret that the past few weeks have been tough for crypto investors. In March, Bitcoin fell from a proverbial cliff, falling from $ 7,700 to a low of $ 3,800 in a single day. Altcoins followed suit, falling even more than the market leader.
And as a result, millions of dollars of cryptocurrency have been liquidated, sentiment has bottomed out, and many traders and investors have thrown in the towel, exacerbated by the recent drop in Bitcoin market liquidity.
But, analysts are starting to conclude that the stars are lining up for the crypto market, especially for Ethereum and certainly for Bitcoin.
Crypto stars line up
Cyrus Younessi, member of the Risk team Ethereumbased on the DeFi MakerDAO application, abstract that happy feeling well when he posted the crypto-viral tweet on April 6, simply explaining that “not since 2017 as much bullish cryptographic stories aligned at once “:
- The growth of decentralized finance (DeFi): DeFi’s growth, analysts said, will significantly boost the uptake of cryptography as consumers increase the relatively high interest rates provided by these blockchain solutions.
- The imminent arrival of Ethereum 2.0: The upgrade is expected to increase the efficiency of the blockchain in terms of transaction speed, transaction throughput and functionality. Researcher Justin Drake said earlier this year that he has “95% confidence that we will launch in 2020”.
- May 2020 block reward reduce by half: This was seen as a decidedly positive event. According to previous reports from this outlet, a quantitative model indicates that the fair value of Bitcoin will reach at least $ 55,000 following the event.
- Gold rally in the past two weeks: Mike McGlone, an analyst at Bloomberg Intelligence, said in a detailed report released this month that the strength of gold should be a boon for Bitcoin and, therefore, for the rest of the cryptocurrency market.
- Federal Reserve repo and open market operations: Analysts say recent attempts by the Federal Reserve to stimulate the economy by buying assets, injecting cash into the economy and lowering interest rates spur the value proposition of a scarce asset like Bitcoin
- Institutions are preparing for cryptocurrency and blockchain: Microsoft, E&Y, Square and Fidelity are among the multi-billion dollar companies that have announced crypto initiatives in the past few months. Presumably, these initiatives will lead to mass adoption over time.
- And, to put a cherry on top of the crypto cake, Bitcoin is coming out of a bear market.
Not since 2017 as much bullish the cryptographic stories aligned at the same time: DeFi, Eth 2.0, Halvening, the gold rally, the Fed repo, the monetization of the debt, the warming of the institutions and the end of the 2.5 year bear market . What more could you ask for?
It’s the set up or shutdown time for cryptography.
– cyrus.ismoney.eth (@ cyounessi1) April 7, 2020
As Younessi puts it best, “What more could you ask for?”
Indeed, each of the trends identified by Cyrus would have a positive impact on the value of cryptocurrencies. Which means that when collected, taking place simultaneously, Bitcoin, Ethereum, and other digital assets will experience a “perfect storm”, so to speak.
A perfect storm that, according to some, like legendary venture capitalist Tim Draper, will bring Bitcoin into the six-digit price range, well above the slump in which BTC is wallowing today.
Is there a risk for Bitcoin and others on the horizon?
Although the aforementioned signs seemingly suggest a rally – and strong in this regard – in the crypto asset market is imminent, some fear it is too early to turn bullish.
Cantering Clark last month written in chalk this justification for his feeling that the BTC will not reach bottom until stocks find bottom, explaining that “the moment when stocks get back to bed Bitcoin will follow”
“We basically went from a bull market to a bear market in less than 20 days. The true extent of the effects and damage has yet to be revealed. We see a fraction of reality. At best, we are in October 2008, [… so] the moment the stock s ** t reads Bitcoin again will follow. “
He further explained that it was also impossible to say which crypto companies, including Bitcoin exchanges, would be affected by the looming global recession, further damaging the prospects for cryptography.
Bitcoin has not bottomed out because stocks have not.
– Cantering Clark (@CanteringClark) March 14, 2020
Yes, stocks have rebounded by about 30% from the local low, but serious analysts and investors believe there is a legitimate chance that further declines will be made for the old markets.
This week, chief investment officer of global investment firm Guggenheim, Scott Minerd, wrote in a note that there was a 40% chance of the S&P 500 falling 40% to 1500, writing that once the markets will have digested the economic data of rising unemployment and shrinking growth, “there will be another level of panic.” (He previously suggested that many businesses are likely “vulnerable to long-term failure As previously reported by CryptoSlate.)
If Clark’s sentiment on the correlation between cryptocurrencies and stocks is to be believed, a 40% drop in stocks would not see Bitcoin rallying. Instead, it would likely drop.
Posted in: Bitcoin, Ethereum, Adoption