The Announcement That May Have Started The Bull Run
With the Indian government issuing a bill to ban all cryptocurrencies in the country, is the crypto market still gearing up for a bullish end of the year? Despite crypto falling and BTC plunging below $60,000; will President Biden’s latest announcement along with a new 5.5 million users joining the crypto market prove to be the catalyst for the crypto bull-run?
Let’s take a look!
The Scepticism That Surrounds The Market
Many politicians in the USA are not exactly in support of a decentralised mechanism that is gaining money by the day. President Joe Biden just introduced a new infrastructure bill that has included provisions of huge cryptocurrency tax reforms, which will allow the government to take away a nice chunk of the crypto returns. Others such as Hilary Clinton and even Donald Trump are not pro-cryptocurrency, believing it to be an easy way for cyber-fraud and money-laundering to take place.
All these underlying factors have resulted in a forgettable month for most cryptocurrencies, which have lost more than 10% in the last few weeks alone. More than billions of dollars have been wiped out from the crypto markets, after another big market crash that took place earlier last week. Bitcoin’s value has sunk below $60,000 for the first time since reaching an all-time high of $69,000 and is currently trading at $56,723.
Apart from Bitcoin, major altcoins such as Solana, Ripple and Cardano have also been facing similar losses, while Ethereum also fell to $4,100 after making highs of almost $4,900.
But the worst news of all has come from India, as the country is on track to ban all cryptocurrencies after a new cryptocurrency regulation bill was introduced on the 23rd of November. If the bill passes, the domino effect could spread from India to the rest of the world, due to the large number of users that buy and trade cryptocurrencies in the Asian country.
But despite the pending ban, cryptocurrencies have barely budged in the last 24 hours. This shows that we are nowhere close to being in a bearish market, but what are the main reasons that have helped the digital assets stay afloat?
Jerome Powell Re-appointed as Fed Chair
On November 22, President Biden officially announced the re-appointment of Jerome Powell for another four-year tenure as the chair of the Federal Reserve. “I’m confident that Chair Powell and Dr Brainard’s focus on keeping inflation low, prices stable and delivering full employment will make our economy stronger than ever before,” said the U.S. president. “Together, they also share my deep belief that urgent action is needed to address the economic risks posed by climate change, and stay ahead of emerging risks in our financial system.”, said the President of the United States.
While reducing inflation was stated as one of the main reasons for his re-appointment, the people who have been following Powell for a while knows that he has a strong view of cryptocurrencies. Since Biden and Powell are working to centralise cryptocurrencies, why would this create a bullish sentiment in the market?
Why This Is Positive News For Crypto Markets
With Powell staying as the chair of the federal reserve, it will be a boom for the crypto markets. In the past two years, cryptocurrencies have been skyrocketing due to low-interest rates and rising consumer savings, along with the stimulus checks that the government has been providing. If Powell is slow to once again increase interest rates, investors will be quite excited.
This stems from the belief that crypto is a hedge against inflation. The limited supply cap of major coins like BTC and ETH gives investors hope that crypto may grow at a rate much higher than the US dollar ever can, due to the Federal Reserve printing out dollars at a rapid rate.
Other than this, Chris Zuehlke, the global head for Cumberland, a crypto assets company that supports the re-appointment of Jerome Powell has commented, “I think the reappointment of Powell is net-positive long-term for the crypto industry. He’s gone on record saying he doesn’t intend to ban crypto assets and has taken a stance that the stable coin market could potentially use some additional regulation”.
In the interview with Chris Zuelkhe on CNBC, he goes on to talk about how Powell’s previous tenure has seen consumer inflation rise to the highest it has ever been in nearly three decades. The belief that crypto is a hedge against inflation is once again a reason to be bullish long-term due to this announcement.
Why Is A BTC Bull-run In December Likely?
Chris Zuehlke commented on the short-term price and future of Bitcoin in more detail.
“Post the recent all-time-highs of $69,000, this is where we are settling today, (referring to the current price below $60,000). From our perspective, our institutional counter-party base seems to be buying Bitcoin and L1’s, to the tune of about 3:1 in terms of notional value.”
This is very interesting news for the crypto market since he confirmed that most institutional investors are buying Bitcoin and Layer-1 coin solutions such as Ethereum, Cardano, Solana etc. at a 3:1 ratio. So despite a dip in the market, 75% of the big money investors are still bullish on the big coins. Chris also went on to say that although weekly option contracts were being sold, options going into December are being bought. The increase of options buying is an extremely bullish move for Bitcoin since it signifies the possible start of a consolidation phase before we can see Bitcoin take-off to the moon.
The French App That’s Giving 5.5 million Users The Option To Trade Crypto
Cryptocurrencies have not only been advertised by Elon Musk on Twitter, but Fintech companies are also getting involved in building community on a much bigger level. The popular Austrian crypto exchange platform Bitpanda is teaming up with the French mobile payments app Lydia, to offer all their 5.5 million users the chance to invest in over 170 crypto assets.
This announcement was made public on November 22, from Bitpanda’s Twitter.
The Austria-based fintech start-up hired Joshua Barraclough, a former JPMorgan executive as the CEO to increase growth over Europe, and so far the move is already making an impact.
“This collaboration is fully aligned with our mission to bring digital assets into mainstream adoption and to improve investment literacy in Europe and beyond,” said Co-founder Eric Demuth.
All these factors are successfully pulling the attention away from the sceptics, in a move to restart the bull-market run that investors have been hoping for. But, it is impossible to say which way the market will go.
Will Jerome Powell’s reinstatement along with the new crypto buying option in France be enough to trigger a successful bull market? Or is the infrastructure bill and the possible India ban too much to recover from?