Blockchain
4 catalysts that could spur the next cryptocurrency rally
- Bitcoin has rallied more than 60% in 2024, driven by January’s rally ETF spot approval and the recent halving event.
- Developers have been working to add features to the bitcoin network, which could drive prices higher.
- The cryptocurrency could also get a boost from interest rate cuts, easing of regulation and the November elections.
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Bitcoin reached records this year thanks to two catalysts: that of January ETF spot approvaland the recent halving event. The cryptocurrency was up more than 60% year to date on Friday, trading at a discount of about 6% to the all-time highs reached in March.
While both drivers are expected to retain pushing the price of bitcoin higher, are now in the background and investors are wondering where to look for further upside. According to analysts, there are many ways in which the price of bitcoin could continue to rise.
The four upcoming catalysts are detailed below:
1. Interest rate cuts
Investors are focused on the Federal Reserve’s outlook for rate cuts, anticipating that stocks could rally as a result. The same dynamic applies to Bitcoin, which has been trading as a speculative asset that appreciates when financing costs are lower.
In fact, it was mainly the extremely low interest rates of 2021 that pushed bitcoin at a record that year. The rally then reversed when the Fed began its monetary tightening campaign.
“In the first quarter we saw the halving, but more importantly we had this massive adoption of ETFs. So once you understand the price, now you’re looking at what the Fed can do,” Mike Novogratz, CEO of Galaxy he told Bloomberg earlier this month.
Until short-term interest rates decline, bitcoin will likely maintain a range between $55,000 and $73,000, he said.
2. Change of regulation
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 Securities and Exchange Commission was preceded by a loss in court.
But legal sentiment towards cryptocurrencies appears to have adapted. A future bitcoin catalyst may be looming stablecoin invoice, Oppenheimer Executive Director Owen Lau told CNBC in early May. It could arrive as early as this year.
Meanwhile, the US House of Representatives has just passed a broad regulatory framework for the cryptocurrency industry, which is being hailed as a victory for the sector. While his fate is unclear in the Senate, it would give the cryptosphere clearer rules.
3. November elections
But real regulatory clarity will come after the presidential election, Novogratz said. He noted that Republican nominee Donald Trump has been a growing voice of support for the industry, in contrast to President Biden’s policies.
In a May note, Standard Chartered’s Geoff Kendrick also said a Trump victory would be largely positive for bitcoin.
He added that there has been increased concern about the Trends in the deficit and American debt Bitcoin will likely rise as well, as investors begin to look for alternative investments. That could happen with either candidate, as neither has offered a plan for how to address government spending, Kendrick said.
4. Expanded use
While the outlook on bitcoin is changing, the cryptocurrency itself is undergoing something of a makeover.
Second Bloomberg, developers have worked hard to add features to the bitcoin network. These efforts appear to be making the cryptocurrency more than just a speculative asset to hold, and with projects quickly coming online, they could offer another catalyst.
For example, the recently released Ordinals protocol allows users to store more than just bitcoins on the BTC blockchain, but to start trading assets as non-fungible tokens. The Ordinals market has already seen daily trading volume reach $3.42 million in mid-May, Bitget Chief Executive Officer Gracy Chen said. wrote on X.
“The advent of Ordinals on Bitcoin in 2023, the BRC-20 token standard created later, and now the Runes token standard, have helped spur interest in thinking about Bitcoin as a network of platforms, not just a monetary network,” Galaxy he wrote in a note. And now, such projects are attracting considerable attention from venture capital investors, she said.