- The best way to determine when the crypto bear market will end is to analyze possible events that could make it happen.
- Adopting Bitcoin as a legal tender in more countries and the integration of cryptos as a payment option by a big firm are two such events.
Officially, the crypto market is now bearish. Thus, many crypto investors have been humbled. This downturn has caused a huge decline in crypto prices with many crypto investors recording losses from their digital asset investment. Hence, the hot debate in the crypto space has been the predictions of when the crypto winter will end.
However, experienced industry analysts strongly believe that it is not possible to predict the end of any crypto winter. Rather, it is better to analyze possible events that can pull out the market from these bearish conditions. Below are the top five catalysts that can push the crypto market on a recovery path.
Ethereum’s successful switch to PoS
In the last five years, many market participants have been expecting the switch of the Ethereum network from a pow (proof-of-work) to a pos (proof-of-stake) network. Many setbacks have affected the switch. However, the success of the merge trial on the public test shows that the switch is closer than ever.
If the switch is successful, the hype surrounding it could positively impact the crypto market. The switch will also affect the market positively if it results in greater scalability and a better user experience. However, it is worth noting that the hype could fade and cryptos can return to their ‘pre-hype’ prices
Approving a spot Bitcoin ETF
The SEC is yet to approve any spot Bitcoin ETF for the US market. Hence, approving one now could result in a crypto market recovery. The US SEC has rejected several BTC ETF proposals since 2017 when the Winklevoss twins became the first to submit a BTC ETF proposal.
The SEC often states that it hasn’t approved any spot BTC ETF because of the easy manipulation of the crypto market. It also states that there aren’t enough policies for investor protection in the market. Hence, if the US financial regulator approves one now, large-scale investors would be more interested in investing in the crypto market. Their cash injection could lead to a crypto market recovery.
A return of the US Fed’s easy money policies
In the last three years, the Fed has implemented various easy money policies with almost-zero interest rates. However, earlier this year, the US Fed hiked interest rates for the first time by 0.25 percent. It has also increased rates twice since that first time. Currently, benchmark rates range between 1.5 percent and 1.75 percent.
The rate raises have caused crypto prices to fall. Between March 2022 and now, Bitcoin’s price has dipped by $28,000. If the fed could re-adopt its easy-money policies, there will be more cash injection into the crypto space. Thus, leading to a crypto market rebound.
Adopting Bitcoin as a legal tender
For now, El Salvador and the Central Africa Republic are the only countries to adopt Bitcoin as a legal tender. While crypto advocates are celebrating this feat, these nations’ adoption hasn’t resulted in broader adoption. However, that could change if top economies like Japan or Germany announce the adoption of Bitcoin as a legal tender.
With the rise in food shortages, conflicts and other macroeconomic issues, many authorities are starting to think outside the box. Hence, a top economy might soon adopt Bitcoin as a currency if the purchasing power of fiat currencies keeps declining.
Integration of crypto payments by a major company
The lack of broader crypto adoption is one reason many prefer not to use cryptos (including Bitcoin) for their daily purchases. While there are indirect ways of conducting crypto transactions, there are limited ways of performing such transactions directly on the blockchain network.
Elon musk has proved several times that the integration of blockchain-based payments can result in a huge market rally for the token being used for such purpose. Hence, if a large firm like apple or amazon integrates crypto payments, it could result in a bullish crypto market.