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Very recently, Bitcoin reached a new all-time high at $73,797 per coin on the 14th of March 2024. Every Tom, Dick, and Harry is wondering how they can get into the market for the fear of missing out (FOMO). But we are asking another question nobody else is asking, and that’s how low bitcoin can go. Without jinxing it, let’s find out what conditions can bring about a retrace like in 2022, which saw Bitcoin crash to about $18,000.
A. Adoption by Mainstream institutions
Bitcoin is Bitcoin, and one place in which it is most evident is its adoption by several institutions. One indicator that Bitcoin is on its way down is if institutions withdraw their support, and, at the moment, this is far from the case. The following are institutions whose adoption of Bitcoin only appears to be growing:
1. The Gambling Industry
Any casino looking to be considered one of the best crypto casinos has to offer Bitcoin. The fact that Bitcoin remains the most popular cryptocurrency means it is still a favorite among crypto casino users. For this reason, adoption in the industry is on the rise.
2. Payment processors
Some payment processors, like PayPal and Square, allow users to buy and sell Bitcoin. This makes it easier for people to acquire Bitcoin and potentially spend it with merchants who accept it.
3. Investment firms
Several investment firms are offering Bitcoin investment products to their clients. This allows institutional investors to gain exposure to Bitcoin without directly buying and holding it themselves. For example, MicroStrategy, a business intelligence company, has made Bitcoin a significant part of its treasury reserve assets.
4. Financial institutions
Some large financial institutions, like JPMorgan Chase, are exploring ways to offer Bitcoin-related services to their clients. This could include custody services (storing Bitcoin securely) or trading platforms.
5. Universities
A small but growing number of universities are accepting Bitcoin for tuition payments or donations. This is a sign that some educational institutions are embracing cryptocurrency.
The fact that these many institutions still have Bitcoin as an offering is a good sign against Bitcoin hitting absolute rock bottom again.
B. Market Sentiment
In the world of cryptocurrency, market sentiment refers to the collective mood of investors towards the crypto market or specific cryptocurrencies. It gauges how optimistic or pessimistic people are about crypto prices.
Since Bitcoin is considered the market leader by many investors, it dictates the market sentiment. Bitcoin is the most established and valuable cryptocurrency. Its price movements are often seen as a bellwether for the entire crypto market. If Bitcoin goes up, it can lead to a positive ripple effect across other cryptocurrencies. Similarly, a Bitcoin price drop can trigger a broader market decline.
So Bitcoin, bearish or bullish?
1. Bullish Trends
Bitcoin Halving Approaching: Historically, Bitcoin halving events (which reduce the amount of new Bitcoin entering circulation) have coincided with price increases. Some analysts believe this upcoming halving could trigger another bull run or keep the price from retracing massively.
Approval of Bitcoin’s Spot ETFs: In a shift from prior years, the U.S. Securities and Exchange Commission (SEC) finally greenlit several spot Bitcoin ETFs in early 2023 [CoinDesk, SEC.gov]. This means these ETFs directly hold Bitcoin, allowing investors easier exposure to the cryptocurrency.
The approval triggered a significant rally in the Bitcoin market, reflecting increased institutional interest and investment opportunities. This charge was led by major financial institutions like BlackRock and Fidelity. They were among the first to launch their own spot Bitcoin ETFs, and they've seen significant inflows so far this year.
2. Bearish Trends
Recent price volatility: Bitcoin's price has fluctuated significantly in recent months, which can indicate investor uncertainty. As of March 17th, 2024, Bitcoin was trading at about $67,000, just three days after it hit a new high. That’s a nearly 10% drop that has some investors concerned.
C. New Regulations Could Dampen Progress
One thing that could remove the wind from the sails of Bitcoin investors is unfavorable regulation changes. While there are no major new comprehensive regulations specifically targeting Bitcoin in the United States as of March 17, 202, the situation is fluid. Here’s what has been happening:
1. Legislative Stalemate
The U.S. Congress is still debating how to regulate cryptocurrency, including Bitcoin. While some bills have been proposed, a comprehensive regulatory framework isn't likely before 2025
2. Court Decisions
Legal rulings are currently shaping how Bitcoin is treated. For instance, a recent court decision could influence which government agency has authority over certain cryptocurrencies.
3. Future Developments
New regulations are still on the horizon. The Securities and Exchange Commission (SEC) might introduce stricter rules, while some states might enact their own crypto regulations.
Conclusion
Predicting what Bitcoin would do is near impossible; if it were, everyone would make a killing as an investor. But the right information makes it possible to pick a side at best, and considering the information available—despite some sources believing it can drop anywhere between $20,000 and $35,000—it doesn’t look likely that the price would drop dangerously.
Remember: Not financial advice!
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.