Quite a bit of people seek to address this question.
There are multiple ways to answer this question. You could think about it from a technology standpoint and dive into aspects like the lightning network, progress in different aspects of the underlying technology that drives bitcoin, the capitulation of many other projects that came up in the previous bull cycle, and other related aspects.
The technology also leads one to think about the currency use and societal implications of the next stage in bitcoin. Remember bitcoin is supposed to be a store of value, helping individuals to escape the tyranny of inflation, primarily.
Then, it also has the possibility of serving as a protection against government over reach and the extent of control that it may have when it comes to fiat debasement through monetary policy and fiscal policy. Further, seeing as how the USD is the reserve currency, and it is a currency that has a significant amount of transactions connected to it, which has implications for other countries and for the people of that country, more bitcoin adoption and a move to alternative currencies creates an entirely new world.
You could look at all these aspects, or, if you’re like most people, you could look at it from the main angle that draws a majority of people to the sector, what could take it to the “moon” and how soon you could find yourself in a lambo.
If you consider yourself a speculator and want to ride the bitcoin wave up, you will certainly want to know what is next for the leading digital asset.
As always, in digital asset land, we notice that there is a host of good news and bad news. Let’s start with the bad news first.
The Bad News in Cryptocurrency Land
Government seem to be applying more pressure and tightening regulations. This is present in the fact that a leading digital asset entity, Coinbase, has been phasing out programs like bitcoin lending.
This seemed like a fantastic idea and (in my view) gave bitcoin that much more value. If you can borrow against it and more people started to treat it like a store of value asset, by keeping the asset and borrowing against it, it would reinforce that theme. Keep the asset, borrow in fiat to fund your various needs. It was and still is a fantastic concept, it is not a novel solution, it’s something that has been present in everything from real estate to other asset classes as well.
The fact that Coinbase, a firm based in the United States (with different licenses to operate and has strived to check the regulator boxes), and not in Malta or the Bahamas, or another place, is now slowly sunsetting this product, sends the wrong signal.
Coinbase has now recently looked into stopping additional sign ups to its platform in India. This would not be a big deal, but India is a country with a significant population, moving into that market and having a portion of that growing market can contribute to Coinbase revenues over time.
This makes me think that there will be a pull back in the Coinbase share price over the next few months, before it starts to march forward, once regulatory factors are addressed.
This issue with significant changes, is not only present in Coinbase. Binance has also seen a great wave of changes in how it runs its operation.
It has been facing regulatory scrutiny across the world, it has scaled back on operations, has seen various key executives depart for greener pastures, and is now seeing requests for depositions by the SEC.
This by no means implies that people are leaving Binance en masse, speculation is still taking place at Binance at a significant level, a tad below peak levels.
The FTX blowup is one that likely placed another blow to the psychology of cryptocurrency traders. It wasn’t another random exchange. The founder appeared in front of members Congress, the exchange sponsored stadiums, and collaborated with legendary figures ranging from Tom Brady to others like Larry David in commercials and other forms of endorsement or sponsorship collaboration.
FTX was merely on large scale blowup, Celsius, and a mixture of other entities like Voyager and others also blew up during this time for one reason or other. These issues ranged from mismanagement of funds to improper risk management.
Many are still reeling from these losses and have yet to recover.
Regulation is a major theme here in cryptoland, it’s been slow since the start of bitcoin but it has now started to become much more prevalent. As regulation increases, it is likely to throw more cold water on the cryptocurrency industry. At least, it may make it to where there may not be significant price increases like we have witnessed before.
Good News for Bitcoin and Cryptoland
Regulation can defang bitcoin by making it to where the image is different. The new image is that it is not for scammers and people on the dark web, it is for respectable investors across the world, see, Blackrock filed a spot bitcoin ETF. That is real money on the sidelines that one should account for when thinking about the trend for the future.
(Bitcoin will fall into the alternative asset class sector, a sector that’s grown and gained traction in a negative and zero interest policy environment.)
That is a big deal because BlackRock is juggernaut in the financial sector. BlackRock has the ability to tap into its vast base to sell the product to, collect fees, and earn while shifting capital flows to bitcoin. But that’s not all.
Franklin Templeton has also filed for a Spot Bitcoin ETF. FT is not a financial giant to sneeze at. Another notable institution that has also applied for a spot ETF, this time relating to ETH, is 21Shares and Cathie Wood’s Ark.
These moves, pending approval, may show that these financial institutions believe there’s a bright future there, indeed, that there’s money to be made in this sector.
Builders Can Build
Downturns allow different interested parties to look past all of the doom and gloom and focus on real problems that matter. If they are able to use the technology and fix real problems, then bitcoin and cryptoland have more substance.
Remember, with bitcoin the core value proposition rests in it being scarce money, decentralized, and other features. It does not have much to prove. It has lasted for a decade and it has continued to gain price momentum. It is steadily making technological improvements with the lightning network and more providers (wallets, and other tool providers) stepping in to contribute to the bitcoin ecosystem.
Finally, bitcoin is still holding steady during the current downturn in the markets. This can serve as a way to bolster confidence in bitcoin and send a signal to those who are looking to build to spend more time in the sector as their time could be well spent. It can also incentivize others to purchase other digital tokens as well and keep the momentum going.
At the same time, we do not want to put too much weight in the price staying steady, it can be that way for a wide variety of reasons. We still notice that technology related stocks have still seen steady gains, with Apple commanding an almost 2 trillion market capitalization.
Visa Taking An Interest In Solana
An loose example of builders building is Visa choosing Solana for its stablecoin and settlement activities. This is an example of building that’s taking place because the report dives into the value of Solana and how it can legitimately contribute to Visa’s needs.
“While we believe that there will likely be multiple blockchain networks that the payments ecosystem will use, we see potential for the Solana blockchain network to become one of the networks that could help power mainstream payment flows. It holds promise for payments due to its speed, scalability and low transaction costs, helping to make it a good candidate for efficient blockchain settlement rails using stablecoins like USDC. The Solana blockchain network incorporates a number of key features and novel innovations that are worth unpacking for anyone interested in payment technologies.”
Bitcoin halving has been a strong signal for Kia-to-lambo aspirants. Bitcoin halved in July 2016, and we witnessed the price gradually rise and explode from December 2016 through December 2017. Bitcoin halved again in May 11,2020, a little after lockdowns were declared in March, 2020, when many aspects looked rather gloomy. Bitcoin fell in price with other financial assets, around 50% or so. Then, Bitcoin, along with other financial assets, saw significant price momentum in 2020 and 2021. It would then reverse the trend over the course of 2022 and decline over 40%.
The next bitcoin halving is set to take place on April, 26, 2024. If the pattern continues, there could be significant positive price momentum in bitcoin toward the latter half of 2024. There may be a significant drawdown before the uptrend, which can make for an interesting opportunity.
Financial uncertainty can be a good thing and a bad thing for bitcoin. It can be a part of the many assets that sells off at first to obtain cash, and then it can be an asset that people purchase again to protect their wealth, if they believe that it is a store of value.
At the present moment, we are in a banking situation, exhibits range from Silicon Valley Bank, to Signature, to others that have experienced distress. These are the one’s who were noted in headlines, others are likely to be in trouble due to tighter monetary policy. Economic data is mixed, with some signs pointing toward a a weak economy or aspects that could contribute to further weakness, production declining, oil prices going up, dollar up squeezing consumers in other countries, companies laying off employees, and similar events.
The market has been trending up, or at least a portion of stocks have been trending up, fueled by AI enthusiasm.
A Brief Summary
The markets are currently sorting through excess and human folly. Examples include Celsius, FTX, and regulators asking more questions to entities ranging from Coinbase to Binance. As this is going on, there is a likelihood of relevant projects that can genuinely create value which can present progress. Genuine progress combined with different awaited events like the spot bitcoin ETFs and the bitcoin halving can likely have a positive impact on bitcoin, and for those who are hodling.