Four upcoming catalysts:
1. Rate cuts
Investors are focused on the prospect of rate cuts from the Federal Reserve, anticipating that the stock market could rise as a result. The same is true for Bitcoin, which acts like a speculative asset that appreciates when borrowing costs are low.
In fact, ultra-low interest rates in 2021 have largely driven Bitcoin prices to record highs. The rally then reversed when the Fed began to implement monetary tightening policies.
“In the first quarter, we had a cut, but it was mainly a large adoption of ETFs. So with the price going up, now you have to focus on what the Fed can do,” Galaxy CEO Mike Novogratz told Bloomberg earlier this month.
He said that until short-term interest rates fall, Bitcoin prices may remain in the range of $55,000 to $73,000.
2. Regulatory shift
Currently, the cryptocurrency community is also looking for consistency in regulation, which has often proved to be an obstacle for Bitcoin. For example, they lost a case before the U.S. Securities and Exchange Commission (SEC) finally approved the spot ETF.
But the legal sentiment around cryptocurrencies seems to be adjusting. Oppenheimer Executive Director Owen Lau told CNBC in early May that one of the catalysts for Bitcoin's future could be the upcoming stablecoin bill. The bill could come as early as this year.
Meanwhile, the U.S. House of Representatives just passed a broad regulatory framework for the cryptocurrency industry, which was hailed as a victory for the industry. Although its fate in the Senate is still unclear, it will provide clearer rules for the cryptocurrency space.
3. U.S. election in November
But Novogratz said that real regulatory clarity will come after the presidential election. He pointed to candidate Donald Trump's growing support for the industry, which is in stark contrast to President Biden's policies.
Geoff Kendrick of Standard Chartered Bank also said in a May report that Trump's victory would have a broadly positive impact on Bitcoin.
He added that growing concerns about the U.S. deficit and debt trends could also drive Bitcoin higher as investors will begin to seek alternative investments. Kendrick said this is likely to happen with both candidates because neither has proposed a plan to address government spending.
4. Expanding Uses
Along with the changing perception of Bitcoin, the cryptocurrency itself is also going through a reinvention of sorts.
Developers have been working to add features to the Bitcoin network, according to Bloomberg. These efforts are aimed at making the cryptocurrency more than just a speculative asset, and with projects coming online quickly, this could provide another catalyst.
For example, the recently released Ordinals protocol allows users to store more than just Bitcoin on the BTC blockchain and start trading assets such as non-fungible tokens. Bitget Managing Director Gracy Chen wrote on X that the Ordinals market had reached $3.42 million in daily trading volume in mid-May.
"The emergence of Ordinals on Bitcoin in 2023, the subsequent creation of the BRC-20 token standard, and now the Runes token standard, have all helped drive interest in Bitcoin as a platform network rather than just a currency network," Galaxy wrote in a report. Now, such projects are attracting a lot of attention from venture investors, the report said.
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