Bitcoin stabilized after the sudden price jump of $ 1,000 last Thursday. A new Bitcoin bull run seems almost inevitable, but how big is this chance? History has taught us that a Bitcoin bull run can be a force of nature, but what are factors that can speed up the next bull run?
1. Yearly Bitcoin Cycle
Bitcoin might shoot up further in the second quarter of the year as history seems to repeat itself. Bitcoin normally does not have a great first quarter.
April has been one of the best months for Bitcoin in recent years and of course we hope that the same goes for 2018. If you have “hoddled” through the last quarter, you may better hodl for now as well. The cryptocurrency market had a nice pump last week and it seems that it is not done yet.
Besides, we can argue about when a new bull run will start and we can argue about what will cause the next bull run. On the other hand, what we probably all agree on is that Bitcoin is here to stay. Casual investors observing the market might finally enter with the feeling of getting a ‘second chance’. We all know what ‘FOMO’ feels like.
2. Tax season is over
Today, 17 April 2018, is the last day of tax season in the US. One of the main reasons why Bitcoin did not do so well in the last quarter may have been related to the tax authorities. Investors who were happy with the high value of Bitcoin at the end of last year may have sold to use the profits to pay taxes.
Spencer Bogart, a partner at Blockchain Capital, told CNBC that tax selling has been a big reason behind this year’s massive bitcoin sell-offs.
“People realized way more tax gains in 2017 than they expected to, and now with crypto prices down 50 percent from their highs, people have to sell twice as much crypto just to cover those taxes.”
“The tax selling has been a very real thing, and it has accelerated over the past couple of weeks,” said Bogart, whose firm invests in a variety of crypto assets. “I’m not surprised as we get a bit closer to Tax Day that some of that pressure, that selling pressure, is starting to ease a bit.”
That could explain why many coins have been sold over the past 3 months. And if that is the case, it should soon be over. If coins are no longer sold so massively, it can have a positive effect on the value.
3. Investment firms ready to step in
The market may soon see big whales like hedge funds and pension funds move into the crypto space. Many positive news articles have popped up lately implicating that the “big boys” are getting ready to invest. Below 3 great examples;
Although many large investors have been very skeptical about cryptocurrencies, their mindset recently seems to have changed. While George Soros still called cryptocurrency a bubble last January, he now is likely to step in.
Ari Paul, chief investment officer at cryptocurrency hedge fund BlockTower Capital, told CNBC that he believes it’s “inevitable” that these institutional investment funds will add crypto assets to their portfolios — sooner rather than later.
“I do think it’s inevitable from a few angles. Even if they never believe in it as an asset class, they’re smart enough to recognize the alpha opportunity.”
“Endowments could pull the trigger at any moment. They’re on the fence.”
The crypto hedge fund Pantera Capital Management believes that the bottom of the price of Bitcoin has been reached. The hedge fund even thinks that the price of Bitcoin may well exceed its previous peak this year. Let’s hope so!
4. Mass adoption
It’s an exciting time for crypto as we stand on the cusp of mass adoption. Although the trading volume and the number of active traders cooled down after the huge spikes in December and January, it is clear that the cryptocurrency market is getting ready for widespread adoption.
Until a year ago, it felt that the bitcoin sphere was reserved only for computer nerds, sneaky investors, and criminals. Bitcoin was often associated with money laundering, drug money, and terrorists. Not something that you wanted to invest in.
Furthermore, the average Joe was not interested in Bitcoin because of a number of reasons. Reports about hacked exchanges made it too risky to step in, not user-friendly wallets that you had to download made it too complicated to begin, and the technology (blockchain) as a whole was totally not understood. Add to this the fact that many people already thought they had missed the ‘Bitcoin boat’ when the price had hit a 1,000 dollars.
With the huge increase in the Bitcoin price in 2017, a lot of ‘average Joes’ felt they had still a chance to profit from the exploding prices. Especially with the rise of new and popular currencies like Ripple. Crypto was smoking HOT in December!
After multiple crashes in Q1 2018, many weak hands may have left the market. There is, however, still a lot of room for growth. Did you know that less than 1% of the global population actually owns cryptocurrencies?
The only thing we need in order to improve adoption among the masses is to make it more consumer friendly. Something a lot of companies are already doing currently. A wave of innovation is now taking place that will start motivating the mass market to enter the crypto space.
It will be several years before crypto goes fully mainstream, but it is now already way easier for investors to step in and profit from the available digital currencies.
5. Media Madness
When waking up nowadays chances are that you will find a news item regarding Bitcoin posted on the website of your favorite newspaper. From daily FUD to positive stories, crypto news is BOOMING!
A few months ago you never saw headlines like this. You saw the occasional news item about Bitcoin going down, but never about other coins or even about the cryptocurrency space in general.
It’s interesting to see that the mainstream media are now very much trying to play an important role within the industry. And it is important to note that cryptocurrency has only really become a big issue in the last year or so. Prior to that, it was considered an interesting technology, but it did not go much further than that.
Luckily, thanks to the media, this has all changed. Media coverage is one of the reasons why cryptocurrencies have reached their popularity. In the early days of the creation of Bitcoin, hardly anybody knew anything about it. Only the ones involved in the project were able to play a role in its existence. This all changed when media attention and a stream of information about this disruptive technology began to emerge.
Therefore, we should not get angry or scared when we read FUD about the crypto market. There is no such thing as bad publicity. Every news item, article or video only does one thing, and one thing only: ‘inform more and more people about the technology’. This all will sooner or later lead to more and more people entering the market!