Author: MARTIN YOUNG, COINTELEGRAPH; Translation: Song Xue, LianGuai
The potential wave of spot trading in Bitcoin exchange-traded funds (ETFs), the new stablecoin from LianGuai, and the key upgrade of Ethereum are all catalysts that could awaken the cryptocurrency from hibernation.
Although the prices of Bitcoin and other cryptocurrencies have improved in early 2023 compared to the second half of 2022, their performance in the past five months has been weaker. Mike Novogratz, CEO of Galaxy Digital, described the market as “lackluster” in June.
However, analysts say they are introducing several catalysts that could bring new sparks to the cryptocurrency market.
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Hendrik Andersson, Chief Investment Officer of Apollo Crypto, is one of the people paying attention to the potential approval of spot Bitcoin ETFs. He said it is “unlikely” to see an ETF approved in the next six months.
He said that the institutional acceptance of cryptocurrencies continues to rise and added that “the worst period of macro tightening seems to be over.” He stated that central banks around the world have paused interest rate hikes, indicating that the interest rate cycle may have ended.
Andersson also noted that LianGuai has launched a stablecoin and the potential steps that Twitter may take to incorporate cryptocurrency payments into future adoption.
“There are other potential catalysts on the horizon, such as X [Twitter]’s plans in payments and financial applications – cryptocurrencies are a real possibility.”
Markus Thielen, Head of Research at Matrixport, also bets on spot Bitcoin ETFs, but he also believes that the upcoming upgrade of Ethereum is worth paying attention to.
“There are two important catalysts supporting Bitcoin and Ethereum prices until the end of the year: the SEC’s potential approval of physically-backed Bitcoin ETFs listed in the United States, and Ethereum’s EIP-4844 upgrade (expected to be implemented in the fourth quarter of 2023).”
The Ethereum upgrade will introduce a mechanism called proto-danksharding, which will lower costs and increase transaction throughput.
In the short term
Meanwhile, Tony Sycamore, a market analyst at Singapore-based trading firm IG, suggests that investors should pay attention to the minutes of the last Federal Reserve meeting.
The Federal Open Market Committee is scheduled to release the minutes of the July meeting on August 16, and it is expected that interest rates will be kept unchanged.
“Especially for Bitcoin, after falling for the second consecutive week on the Nasdaq, it will focus on signs of stability in the US stock market and interest rate markets, as yields have been rising over the past four weeks.”
Since mid-March, the price of Bitcoin has been fluctuating within the $6,000 range. It has been proven that the resistance level just above $31,000 was too strong in at least four different instances, while the support level was at $25,000 during the mid-June decline.
In addition, due to the lack of liquidity and trading volume in recent months, market volatility has reached a historic low.