Crypto gains positive momentum as international organizations and government leaders embrace decentralised finance. Major players like Fidelity, VISA, MasterCard and BlackRock are actively exploring the sector, indicating mainstream adoption. Technical indicators suggest potential market recovery after a rough December 2022, and the Bitcoin halving event may drive the historic four-year cycle of the crypto market.
Institutional Adoption
One of the biggest stories in crypto recently has been the growing adoption of this asset class by institutional investors. Fidelity Investments, for example, launched its own crypto trading platform, Fidelity Digital Assets, which has been well-received by investors. Other major players, such as JPMorgan and Goldman Sachs, have also made significant investments in crypto-related businesses. These developments are important because they signal a growing acceptance of crypto as a legitimate investment asset. This acceptance, in turn, can lead to increased liquidity and a more stable market, which can benefit both investors and crypto projects.
Moreover, ARK Investment Management, led by Cathie Wood, has raised its Bitcoin price target to $1.48 million by 2030, as per a recent ARK report. The report highlights Bitcoin’s massive global growth potential, expecting the digital asset to account for an increasing share of global assets held by institutions over time. The report also includes excellent performance data, with Bitcoin delivering a compound annualized return of 8.7% over five years to 2022, compared to global stocks, global debt, and gold. ARK Invest’s Bitcoin price target is based on growth in remittance, institutional adoption, fiat devaluation, and banking the unbanked. The target price of $1.48 million per coin would place Bitcoin’s total market capitalization at $31 trillion, worth more than 2.5x the total gold supply, and roughly equivalent to the 500 largest companies traded in America today.
Asia’s central banks, including China’s, have been easing policies and injecting liquidity into global markets, sparking the next crypto bull run. As access to cheap cash becomes more widespread, the world’s largest crypto holder population in Asia is expected to boost demand for cryptocurrencies further.
Accommodative Regulatory Policy
The world of cryptocurrencies has come a long way since its early days, and one of the most significant developments is the increasing recognition and regulation of these digital assets by governments and regulatory bodies worldwide. In recent years, we have witnessed a surge in the number of countries that are adopting legal frameworks for cryptocurrencies, providing greater clarity and security for investors and businesses alike.
Technical Indicators
In December 2022, the crypto markets experienced selling pressure. However, since then, technical indicators have been pointing towards a potential recovery. For example, the Relative Strength Index (RSI) has been showing oversold conditions, which often indicates a bottom in the market. Additionally, other technical indicators, such as the Moving Average Convergence Divergence (MACD), have been showing bullish signals. These technical indicators, combined with the increasing institutional adoption, are providing hope for investors that the worst may be over for the crypto markets.
Rand Cost Averaging
Investing in crypto can be a high-risk, high-reward proposition. However, one way to reduce risk and potentially increase returns over the long term is to use a strategy called Rand Cost Averaging (RCA). RCA involves investing a fixed amount of money at regular intervals, regardless of the current price of the asset. The idea behind RCA is that it can help you avoid the pitfalls of trying to time the market. Instead of trying to predict when the market will bottom out or peak, you simply invest a fixed amount of money at regular intervals, which means you end up buying more coins when prices are low and fewer coins when prices are high. This can help you avoid the temptation to invest a large amount of money all at once, which can be risky if the market takes a sudden downturn.
The 4-Year Cycle
The crypto market seems to follow a four-year cycle that is driven by the halving event. This is the moment that the Bitcoin reward for miners is halved, which has historically led to a bull market shortly after. In 2017 and 2021, we saw significant bull markets in the wake of the halving event. While past performance is not necessarily indicative of future results, this four-year cycle is something that investors and traders alike should pay attention to. The concept of halving also stands as a reminder of Bitcoin scarcity, which opposes the fiat money model of infinite printing capabilities.
Looking Forward
As the crypto industry continues to mature, it’s clear that institutional adoption, technical indicators, Rand cost averaging, government policy and the four-year cycle are becoming increasingly important factors to watch. With more institutions entering the space and technical indicators pointing towards a potential recovery, the future of crypto looks bright. However, as with any investment, it’s important to do your own research and invest wisely.
Source: EasyCrypto