5 events that could put an end to the current crypto bear market

by · July 8, 2022

To the great annoyance of cryptocurrency investors throughout the ecosystem, the bear market has officially stepped in and brought with it devastating price collapses that have left relatively few unharmed.

As the popular topic of conversation now centers on bearish predictions about how low Bitcoin (BTC) will go and how long this iteration of the crypto winter will last, those with more experience on the matter know that it is virtually impossible to predict the bottom and it would be wise to use these energies elsewhere.

Instead of focusing on when at the end, it is perhaps more constructive to explore what events can help pull the market out of the bear market and set it on track for the next cycle.

Here’s a look at five potential catalysts that could pull the crypto market out of its current discomfort.

A successful Ethereum merger

One of the most anticipated developments in the last five years has been the ongoing transition to the Ethereum network from proof-of-work to proof-of-effort.

Although the process has been lengthy which has met with many setbacks, the official change is now closer than ever after the successful completion of the merger test on the public test network Sepolia.

It is possible that the construction hype surrounding the Ethereum merger could help pull the crypto market out of its bearish state if the transition were to go smoothly, especially if it contributes to more scalability and a faster user experience. As it stands right now, the merger will take place in August 2022.

It should be noted that a successful merger can also lead to a “buy the rumor, sell the news” type of event where prices pump up for a short time due to the euphoria of crypto holders, and then fall back when the global financial crisis is in a serious state. the system comes back in advance.

Approval of a spot Bitcoin ETF

Another event that has been rumored for years that could trigger a cryptocurrency revival is the passage of a spot Bitcoin exchange traded fund (ETF) for US markets.

Ever since 2017, when the first BTC ETF proposed by the Winklevoss twins was rejected by the US Securities and Exchange Commission (SEC), it has been one rejection after another for any physically supported Bitcoin ETF proposal submitted.

The reasons for the rejection are usually the accusation that cryptocurrency markets can be easily manipulated and that the right security measures are not in place to protect investors.

If a spot ETF were to be approved, it would make this long-standing objection controversial and bring a new level of legitimacy to Bitcoin and the cryptocurrency class as a whole. This has the potential to usher in a new wave of institutional adoption that could bring an end to the crypto winter as new funds flow into the market.

The Fed turns the course

“Do not fight the Fed” is a common term used by investors to explain one of the most influential forces in global financial markets. After several years of simple monetary policy and interest rates close to zero, the US Federal Reserve approved an interest rate increase of 0.25%, the first interest rate increase in more than three years.

Since then, the Fed has implemented two additional interest rate hikes of 0.5% and 0.75%, bringing the current reference rate to a range of 1.5% to 1.75%.

Over the same period, risk assets around the world have fallen in price, with Bitcoin falling from $ 48,000 at the end of March to the current price, trading close to support at $ 20,000.

The historic increase in the cryptocurrency and legacy markets that was witnessed in 2021 was largely driven by the Fed’s simple monetary policy, and it is highly likely that a return to such guidelines will again see funds flow into the cryptocurrency ecosystem.

Major adoption of Bitcoin as a legal tender

In 2021, El Salvador became the first country in the world to use Bitcoin as a legal tender for its citizens. In April 2022, the Central African Republic (CAR) became the second country to do so, indicating an increasing trend.

Although the use of BTC as a legal tender has been a long-standing goal for crypto supporters and the decisions of El Salvador and CAR are worth celebrating, the adoption of such small players on the world stage has done little to promote more mainstream approval.

However, it would probably change if a larger market such as Japan or Germany were to open up to officially promote the use of BTC by their citizens for their daily purchases.

Recent developments on the global stage, including conflicts and food shortages, are forcing governments to do things they have never considered, and it is not out of the question for a larger economy to turn to Bitcoin as a last resort currency as fiat currencies continue to lose its purchasing power.

Related: EU-regulated company Banking Circle uses USDC stablecoin

Integration as a payment alternative of a large company

A common excuse for why people do not use Bitcoin or cryptocurrencies for their daily purchases is because it is not really accepted anywhere.

Although there are options available to access the value held in crypto, such as debit cards and online payment integrations with platforms such as Shopify, the ability to make purchases by performing transactions directly on a blockchain network is relatively limited.

On several occasions, Elon Musk has demonstrated that only the mention of integration of blockchain-based payments can trigger a market upturn for the token in question.

Based on this and other examples of price pumps that followed speculation about a major adoption announcement, it is likely that cryptocurrencies integrated by a large company such as Amazon or Apple could trigger a bullish wave of momentum.

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The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade involves risk, you should conduct your own research when making a decision.