Analyst: 5 Factors Breaking Down Bitcoin and Crypto Market Slump

Author: MARTIN YOUNG, cointelegraph Compiler: Shan Ouba, Golden Finance

Analysts believe that spot bitcoin ETFs, the adoption of new stablecoins, and the upcoming scaling upgrade of ethereum are all catalysts that could reignite the cryptocurrency market.

A potential wave of spot bitcoin exchange-traded funds, a new stablecoin from PayPal, and a key upgrade to ethereum could all be catalysts for waking up the cryptocurrency market.

Although the price of Bitcoin and other cryptocurrencies in early 2023 has improved relative to the second half of 2022, the performance of the past 5 months has been relatively weak. Galaxy Digital CEO Mike Novogratz said in June that the market was "lack of dynamism."

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

Apollo Crypto chief investment officer Henrik Anderson is among those eyeing the potential approval of a spot bitcoin ETF, saying it is "unlikely" to see a bitcoin ETF approved within the next six months.

Institutional acceptance of cryptocurrencies continues to rise, he told Cointelegraph, adding that “the worst of macro tightening appears to be behind us.” Central banks have paused rate hikes, which could mean the cycle of rate hikes is over, he said.

Andreessen also noted PayPal's stablecoin launch and Twitter's possible move to incorporate crypto payments into future cryptocurrency adoption as signs. “There are other potential catalysts on the horizon, for example, what are Twitter’s plans for payments and financial applications — cryptocurrencies could be a real possibility,” he said.

Markus Thielen, director of research at crypto financial services platform Matrixport, is also betting on spot bitcoin ETFs, but said the upcoming ethereum upgrade is also something to watch. He explained: “There are two important catalysts that will continue to support the price of Bitcoin and Ethereum until the end of the year: the possible SEC approval of a physical Bitcoin ETF listed in the United States, and Ethereum’s EIP-4844 upgrade (expected in 2023 to be carried out in the fourth quarter of the year).”

Ethereum's upgrade will introduce a mechanism called "proto-danksharding," which will lower transaction fees and increase transaction throughput.

Short term view

Meanwhile, Tony Sycamore, a market analyst at Singapore-based trading firm IG, told Cointelegraph that investors should focus on the minutes of the Federal Reserve’s last meeting.

The Federal Open Market Committee is scheduled to release the minutes of its July meeting on Aug. 16 and is expected to keep rates unchanged.

“For bitcoin in particular, investors will be watching for signs of stabilization in U.S. equities after the Nasdaq fell for a second straight week, and will be keeping an eye on the interest rate market, as yields have been flat for the past four weeks,” he noted. Uptrend.” Since mid-March, bitcoin prices have been trading in a $6,000 range. However, resistance just above $31,000 proved to be too strong on at least four different occasions. During the decline in mid-June, support was at $25,000.

Additionally, market volatility has hit record lows due to reduced liquidity and trading volumes in recent months.