In the blink of an eye, the world seems to have gone from ‘Why do we even need Bitcoin?’ to ‘When will regulations start supporting crypto?’ or ‘When will ETFs finally come into being?’. It's a bittersweet moment indeed. There's a sense of delight regarding the newfound recognition of Satoshi Nakamoto's innovation, which has been around for 15 years. Yet, there's also a niggling worry about whether it would have been wise to acquire more Bitcoin when the prices were low. 


Market volatility often influences investment decisions, and just as it posed a challenge for additional Bitcoin investments, the value of Bitcoin soared, doubling in price and validating the 'Uptober' expectations against the backdrop of institutional investors looking forward to ETFs. 


This leads us to the critical question at hand: What is the future of Bitcoin?


The Future Of Bitcoin


US Fed Chair Jerome Powell’s predictions about rising interest rates are finally a reality and the naysayers are still in disbelief. For the past few weeks, most financial experts have dismissed the possibility that rising interest rates would affect the economy. 


However, now that it's here, the stock market's decline appears certain, along with the possibility of larger banks collapsing due to rising credit interest, and the dollar index and treasury yield sank lower as a result.  


The nine-letter word, which starts with R and ends with N with ‘ecession’ in between, seems like something that would set in before the financial year ends, unless prevented by some drastic policy intervention.


Traditionally, this has always been favourable for Bitcoin since people widely perceive it as a hedge against inflation. However, we cannot undermine the fear factor that might set in if the stock market prices go down. Investors might look at simultaneously exiting both the stock and crypto market while they can still get some profits out of it. This could, in fact, impact the price upswing that has set in.


Bullish On Coins


All indicators point to a bull market, especially Bitcoin’s sideways movement and the simultaneous rise of altcoins. While HODLers might continue to invest or retain their funds, we could also see some anxious existing investors take off with a profit. They have been reeling from the effects of the SBF fiasco and the bear market for a while, and might just grab the opportunity to get out while the prices are soaring. 


The new support level is being deemed to be at $31,000, which means at this level, buyers can be seen engaging with the market in the coming months, which could boost trading activity across exchanges that have declined over the past year. However, it is vital to remember that the price increase is being driven by the anticipation of Bitcoin ETFs, which have been requested by institutional financial behemoths such as Blackrock, VanEck, and GrayScale, among others. If and when the approval comes in, it will be a huge win. 


But in case this happens in this financial quarter, the market growth driver would mellow down as the participants soak in the effects of the move. This means for the next price rally, the market will seek another impetus if there is a larger gap between ETF approval taking place and the next Bitcoin halving event. 


In case there are no driving factors that seem encouraging to participants after ETFs come into effect, prices might see some downward movement, even going below $31,000 levels. Inevitably, there would be a revival before the halving event.


On the other hand, while the latest price rally for BTC is being attributed to the market anticipating spot Bitcoin ETF approval by the Fed, it has also been driven by a surge in Bitcoin purchases especially in markets across Asia, where makers have gotten into call option buying for the token. 


The Relative Strength Index has also projected overbought conditions in the last few weeks. Institutional investors are being touted as the saviour of Bitcoin since their intervention has boosted the market sentiment and often worked wonders for the price. 


But it is important to note that many of them who deal with hedge funds, credits or equities might not be keen to invest in crypto due to reputational as well as financial risks that are still associated with the asset. Furthermore, we cannot forget that the liquidity crunch in the market still looms at large and while awareness might have increased manifold, without adequate liquidity, adoption and participation remains restricted. 


Finally, we have seen consolidation phases after a mammoth price surge which gets the market into correction mode. If the support level does not settle at $31,000, we might see BTC price settle at $29,000 and sustain till ETF approvals come in or new users usher into crypto to avoid the woes of the stock market or traditional monetary funds in the face of a possible recession. 


(The author is the Vice President of crypto investment platform WazirX)


Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP Network Pvt. Ltd. Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever.