Analyst 5 factors breaking the current downturn of Bitcoin and the crypto market

5 Factors Breaking Bitcoin and Crypto Market Downturn Analyst

Author: MARTIN YOUNG, translation by: Shanooba, LianGuai

Analysts believe that the adoption of spot Bitcoin ETFs, new stablecoins, and the upcoming Ethereum scalability upgrade could reignite the cryptocurrency market.

The potential wave of spot Bitcoin exchange-traded funds, LianGuai’s new stablecoin, and Ethereum’s critical upgrade could all serve as catalysts to awaken the cryptocurrency market.

Despite the relative improvement in the price of Bitcoin and other cryptocurrencies in early 2023 compared to the second half of 2022, the past five months have been relatively weak. Mike Novogratz, CEO of Galaxy Digital, stated in June that the market was “lacking vitality.”

However, analysts revealed to Cointelegraph that they are launching several catalysts that could inject new vitality into the cryptocurrency market.

Henrik Andersen, Chief Investment Officer of Apollo Crypto, is one of those who is paying attention to the potential approval of spot Bitcoin ETFs, and he believes that it is “unlikely” to see the approval of Bitcoin ETFs in the next six months.

He told Cointelegraph 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, which may indicate that the interest rate cycle has ended.

Andersen also noted the launch of LianGuai’s stablecoin and the actions that Twitter may take to incorporate cryptocurrency payments into future cryptocurrency adoption. He said, “There are other potential catalysts on the horizon, such as what Twitter’s plans are in terms of payments and financial applications – cryptocurrency could be a real possibility.”

Markus Tilen, Research Director of Matrixport, a cryptocurrency financial services platform, also has his bets on spot Bitcoin ETFs, but he also believes that the upcoming Ethereum upgrade is worth paying attention to. He explained, “There are two important catalysts that will continue to support the prices of Bitcoin and Ethereum 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 take place in the fourth quarter of 2023).”

The Ethereum upgrade will introduce a mechanism called “proto-danksharding,” which will reduce transaction costs and increase transaction throughput.

Short-term Outlook

Meanwhile, Tony Sycamore, Market Analyst at Singapore trading firm IG, told Cointelegraph that investors should pay attention to the minutes of the Federal Reserve’s last 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 remain unchanged.

He pointed out, “Especially for Bitcoin, after two consecutive weeks of decline on the Nasdaq, investors will focus on signs of stability in the US stock market and closely monitor the interest rate market, 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. However, it has been proven that the resistance level slightly above $31,000 was too strong in at least four different cases. And during the drop in mid-June, the support level was at $25,000.

In addition, due to the decrease in liquidity and trading volume in recent months, market volatility has reached a historic low.