Where’s the Crypto Market Headed? [July 19]

Where is the Cryptocurrency Market Headed? [July 19]

Which way are we going?

Bitcoin is closing in on $70,000 and the crypto world is on high alert.

With just 6% left from the all-time high, we are all wondering: What is causing this increase and where are we headed?

Let’s take a look at what these factors could mean for the future of the market.

But first…

Why Is Bitcoin Rising?

The Bitcoin 2024 conference in Nashville just wrapped up, and it was magical. For the first time in crypto history, we saw major political figures from across the spectrum show overwhelming support for Bitcoin.

Former President Trump promised to create a “strategic Bitcoin reserve” if he is re-elected. That’s not just talk — it represents a potential shift in how governments view cryptocurrencies as strategic assets.

Senator Cynthia Lummis took this a step further by proposing a plan for the US Treasury Department to purchase 1 million Bitcoins.

Even Robert F. Kennedy Jr., who ran as an independent, announced that he “holds most of his wealth in Bitcoin.”

While this personal investment strategy does not directly impact politics, it does show that Bitcoin is gaining increasing acceptance among political figures.

This level of political support is unprecedented.

In 2020, crypto was barely on the political radar. Now, it has become a campaign issue with potentially far-reaching implications for future policy and adoption.

Economic Factors

While political support is making headlines, economic factors are also fueling Bitcoin’s rise.

Inflation is showing signs of cooling, with the Personal Consumption Expenditures (PCE) index rising just 0.1% in June, leading investors to speculate about possible interest rate cuts from the Federal Reserve.

Historically, when the Fed has loosened monetary policy, we’ve seen interest in riskier assets like Bitcoin increase. The last time we saw a major bull run in 2020-2021 coincided with unprecedented monetary easing in response to the COVID-19 pandemic.

However, it is important to note that the current economic landscape is different. We are not in a crisis, but rather navigating a post-pandemic recovery that has its own unique challenges.

Corporate Support

We are witnessing a noticeable increase in institutional participation, a trend that has been increasing since the launch of Bitcoin ETFs in January.

The Michigan State Treasury recently announced a $6.7 million investment in the ARKB Bitcoin ETF. This follows the Wisconsin State Investment Board’s move to take positions in Bitcoin ETFs in Q1.

The story continues

These state-level investments are significant. They represent a shift in how traditional financial institutions view Bitcoin — not just as a speculative asset, but as a legitimate part of a diversified portfolio.

Even Bitcoin miners, who are often seen as natural sellers, are changing their stance. Marathon Digital’s recent announcement of a $100 million Bitcoin purchase sends a strong signal about their confidence in future price appreciation.

Where Can We Go?Election Year Effects

The upcoming US presidential election adds another layer of curiosity to the crypto markets. In both 2016 and 2020, we saw significant market movements in the months leading up to and following the elections.

This time around, crypto has become a campaign issue in its own right, and the market’s reaction to political developments may be more pronounced than ever.

For example, Trump’s recent comments at the Bitcoin conference led to a noticeable price increase. As we get closer to the election, we may see increased volatility in response to campaign promises and crypto-related policy proposals.

The Regulatory Landscape: Navigating Uncertain Waters

The crypto industry is still trying to find its place in the regulatory world. The SEC’s recent approval of Ether ETFs suggests some progress toward mainstream adoption, but ongoing legal battles (like the Ripple case) continue to create uncertainty.

The outcome of these regulatory decisions can have far-reaching impacts on the market. While a clear regulatory framework can pave the way for greater corporate adoption, overly restrictive policies can stifle innovation and growth.

Global Economic Factors: A Broader Perspective

While our focus is mostly on events centered in the US, it is important to consider the global picture. The last time Bitcoin was near these levels, we were in a very different economic climate globally.

Countries facing economic instability or high inflation rates could turn to Bitcoin as a hedge, potentially increasing demand. We’ve seen this in countries like Argentina and Turkey in recent years.

Additionally, global geopolitical tensions could impact Bitcoin’s perceived value as a non-government-controlled asset. Any major international developments could have knock-on effects for the crypto market.

What to Watch

1. Political developments: Keep an eye on how crypto policy evolves as we get closer to the election. More approvals or concrete policy proposals could impact market sentiment.

2. ETF performance: New Ether ETFs and existing Bitcoin ETFs provide a window into institutional and retail interest. Significant inflows or outflows could signal changing attitudes.

3. Global adoption: Track news of countries or major companies adopting Bitcoin. El Salvador’s Bitcoin experiment in 2021 sent markets into overdrive — similar moves by larger economies could have an even bigger impact.

4. Regulatory news: Any major regulatory decision, especially in the U.S., could have far-reaching implications. The outcome of ongoing legal cases and new policy announcements will be crucial.

5. Technical indicators: While fundamentals are driving the current volatility, technical analysts will be watching key resistance levels. A decisive breakout above the all-time high could trigger a new wave of buying.

6. Macroeconomic data: Inflation reports, GDP growth, and Fed policy decisions will continue to impact Bitcoin’s performance as both an inflation hedge and a risk asset.