Much to the chagrin of cryptocurrency investors across the ecosystem, the bear market has officially taken hold and led to devastating price crashes that have left relatively few unscathed.
While the popular topic of conversation now focuses on bearish predictions for Bitcoin (BTC) decline and how long this iteration of the crypto winter will last, those with more experience on the matter will know that it is virtually impossible to predict the bottom and it would be wise to apply these energies elsewhere.
Instead of focusing on the timing of the end, it is perhaps more constructive to explore what events could help pull the market out of the depths of the bear market and put it on the path to its next bull cycle.
Here is a look at five potential catalysts that could pull the crypto market out of its current malaise.
A successful Ethereum merger
One of the most anticipated developments of the past five years has been the ongoing transition of the Ethereum network from proof-of-work to proof-of-stake.
While the process has been long and has seen many setbacks, official change is now closer than ever after the successful Merge trial on the Sepolia public testnet.
Another big day for Ethereum as Sepolia testnet successfully merges with beacon chain!
Sepolia = merged✅
Goerli = next
And then… Mainnet!
The merger is coming
— Metis (@MetisDAO) July 6, 2022
It’s possible that the hype around the Ethereum merger could help pull the crypto market out of its bearish state if the transition goes smoothly, especially if it contributes to greater scalability and a faster user experience. As it stands, the merger is expected to take place in August 2022.
It should be noted that a successful merger could also lead to a “buy the rumour, sell the news” type event where prices briefly pump due to euphoria among crypto holders, only to fall back once the dire state of the global financial situation. system returns to the foreground.
Approval of a spot Bitcoin ETF
Another event that has been rumored for years that could trigger a crypto revival is the move of a Bitcoin exchange-traded fund (ETF) to cash for US markets.
Since 2017, when the first BTC ETF offered by the Winklevoss twins was rejected by the United States Securities and Exchange Commission (SEC), there has been one rejection after another for any physical-backed Bitcoin ETF proposal.
One-Spot SEC Resistance #Bitcoins The ETF is becoming almost legendary,” said SEC Commissioner Hester Peirce.
Hint: she hates it as much as we do.
— Bitcoin Archive (@BTC_Archive) July 7, 2022
Reasons for rejection usually revolve around the accusation that cryptocurrency markets are easily manipulated and proper safeguards are not in place to protect investors.
If a spot ETF were to be approved, it would render this long-standing objection moot and bring a new level of legitimacy to Bitcoin and the crypto asset class as a whole. This has the potential to usher in a new wave of institutional adoption that could lead to the end of the crypto winter as new funds pour into the market.
The Fed backtracks
“Don’t fight the Fed” is a common phrase used by investors to explain one of the most influential forces in global financial markets. After several years of easy money policies and near-zero interest rates, the US Federal Reserve approved a 0.25% interest rate hike, the first rate hike in more than three years.
Since then, the Fed has implemented two additional rate hikes of 0.5% and 0.75%, bringing the current benchmark interest rate to a range of 1.5% to 1.75%.
Over the same period, the price of risky assets around the world has fallen, with Bitcoin falling from $48,000 at the end of March to its current price, which is trading near support at $20,000.
The historic rise in cryptocurrency and legacy markets that was seen in 2021 was largely driven by the Fed’s easy money policies, and it’s highly likely that a return to such policies would see new funds are pouring into the crypto ecosystem.
Major adoption of Bitcoin as legal tender
In 2021, El Salvador became the first country in the world to adopt Bitcoin as legal tender for the use of its citizens. In April 2022, the Central African Republic (CAR) became the second country to do so, indicating an upward trend.
While the use of BTC as a legal form of bidding has been a long-time goal of crypto proponents and the decisions of El Salvador and CAR are worth celebrating, its adoption by so many small players on the world stage has done little to promote greater dissemination. acceptance.
These countries plan to make #Bitcoins legal tender:
— ₿itcoin Xoe (@Bitcoin_Xoe) July 3, 2022
However, this would likely change if a larger market like Japan or Germany opened up to officially promoting the use of BTC by their citizens for everyday purchases.
Recent developments on the world stage, including conflict and food shortages, are pushing governments to do things they never considered, and it’s not out of the question that a bigger economy could turn to Bitcoin as a currency of last resort as fiat currencies continue to lose purchasing power.
Related: EU Regulated Firm Banking Circle Adopts USDC Stablecoin
Integration as a payment option by a large company
A common excuse for why people don’t use Bitcoin or cryptocurrencies for their daily purchases is that they aren’t really accepted anywhere.
While there are options available to access value held in crypto, such as debit cards and online payment integrations with platforms like Shopify, the ability to make purchases by transacting directly on a blockchain network is relatively limited.
On several occasions, Elon Musk has demonstrated that the mere mention of integrating blockchain-based payments can trigger a market rally for the token in question.
JUST IN: Elon Musk’s Boring Company will accept #Dogecoin as a method of payment for loop journeys.
—Watcher.Guru (@WatcherGuru) July 6, 2022
Based on this and other examples of price pumps following speculation of a major adoption announcement, it’s likely that crypto payments integrated by a major company like Amazon or Apple could trigger a wave of momentum. bullish.
Want more information on trading and investing in the crypto markets?
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of TAUT.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.