KEY TAKEAWAYS
- Traditional financial institutions' renewed emphasis on bitcoin spot ETFs could potentially lift bitcoin prices.
- Analysts suggest that the downturn in bitcoin's market may be all over, foreseeing prices might exceed $100K within the next few years.
- Regulatory changes and the outcomes of significant legal standoffs between the SEC and crypto platforms may significantly affect crypto markets.
- A recession spurred by government policy could favor the crypto market if crypto is seen as a decentralized safe harbor.
Bitcoin Prices May Be Elevated by Traditional Finance Companies
Following a series of crypto-related bankruptcies, culminating in the FTX collapse in November, many investors' faith in the crypto market waned. However, bitcoin prices recently rebounded as several firms, including Blackrock (BLK), Fidelity Investments, Invesco (IVZ), and Wisdomtree (WT), reiterated their pursuit of establishing spot bitcoin exchange-traded funds (ETFs).
Bitcoin Prices May Have Bottomed Out, Analysts State
Adamant Research suggests that bitcoin will remain in the $22,000 to $42,000 range during its buildup phase before ultimately topping $120,000 due to a multi-year bull cycle.
Since their first report on bitcoin in November 2012, Adamant Research has consistently issued subsequent reports at periods when the crypto markets were significantly undervalued. The latest report from April 2023 discusses potential risks such as regulatory interventions and sell-offs by substantial holders but also projects a robust bitcoin bull market driven by ongoing high inflation and a troubled bond market.
Meanwhile, an April 2023 note from Standard Chartered Bank predicts an imminent surge in bitcoin to $100,000 by the end of 2024, with the bank citing factors including solvency issues in the banking sector as key to restoring bitcoin's reputation as a decentralized digital asset.
As the Federal Reserve gradually veers away from its tightening policy, and as the upcoming Miners' Reward Halving Event in 2024 approaches, Standard Chartered analysts anticipate further augmentation in bitcoin prices.
Regulatory Developments Require Close Monitoring
In recent months, several crypto firms, including Binance, Coinbase (COIN), and Kraken, have seen stringent regulation by the U.S. Securities and Exchange Commission (SEC). The contention primarily centers around non-bitcoin crypto assets deemed as securities, prompting legal actions against the platforms for trading unregistered securities.
The outcomes of unresolved legal fights, such as Ripple Labs v. SEC and SEC v. Coinbase, could have significant implications for the broader crypto markets.
What Would a U.S. Recession Mean for Crypto?
Potential recession in the U.S. could affect crypto prices and demand for high-risk assets. However, a May report from S&P Global suggests that if the recession is policy-induced, crypto may be viewed as a digital, decentralized safe haven, thus boosting crypto.
Nonetheless, S&P analysts claim that there is insufficient data at this point to conclusively determine cryptocurrency's effectiveness as a hedge against inflation.
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