these 5 facts that could end the bear market

Between the decisions of the Federal Reserve and The Merge, the next event that the community has long awaited, what are the elements that could make the cryptocurrency market soar?

In recent months, the cryptocurrency market has entered a so-called “bear” market phase, also known as a bear market. This is not the first time: the market, highly volatile, has already experienced many declines in recent years, including in 2012, 2015-2016, one in 2018-2019 and one currently. But the 2022 crypto crash appears to be the most violent bear market for the cryptocurrency ecosystem, as Glassnode pointed out in a note recently.

After each fall, the cryptocurrency market went uphill, with the disappearance of certain cryptocurrencies that were too vulnerable and the confirmation of certain other cryptocurrencies or players in the ecosystem. Bitcoin, which remains the queen of cryptocurrencies in terms of capitalization according to data from Coinmarketcap ($391 billion), reached an all-time high of $69,000 in November 2021. At the time of writing this article, it stands close to $20,000, weakened by two recent crypto crashes. Will he be able to climb the ramp and drag the whole market into a “bull” market?

According to an article by CoinTelegraph, 5 elements could end the bear market situation.

This is no longer a surprise: for several months now, bitcoin – which generally drives all cryptocurrencies down or up – has become increasingly correlated with traditional financial markets (mainly the Nasdaq), which are reacting to announcements from the central bank.

Indeed, technology stocks and cryptocurrencies are among the most sensitive assets to the policy of the central bank, and in particular the US central bank (the Fed). Overall, in the years 2020 and 2021, there was strong liquidity in the markets injected by central banks to support economies in the midst of a pandemic.

This caused the cryptocurrency and Nasdaq market and other risky assets to soar. But the year 2022 is different and the economic context has changed: the Fed has indeed started raising its rates (0.5% and 0.75%) to fight inflation.

Faced with the tightening of monetary policy by the US central bank, investment in the riskiest assets is declining. There is less money in circulation in the financial markets and that is disadvantageous for the Nasdaq and therefore for cryptocurrencies.

On July 26 and 27, it will also make its decision on a further hike in interest rates, which will effectively impact the price of cryptocurrencies.

  • The adoption of bitcoin by the great powers

Another macroeconomic phenomenon is related to the adoption of bitcoin as legal tender in certain countries, such as El Salvador and more recently the Central African Republic.

“Its adoption by such small players on the global stage has done little to foster wider adoption. However, that would likely change if a larger market like Japan or Germany opened up to the official promotion of their use of BTC. citizens for their daily purchases”, emphasizes the media.

The major international powers are thinking more of launching a central bank digital currency (MDBC) than adopting bitcoin.

  • The integration of cryptocurrencies as a means of payment

According to Coinmap data, 29,700 companies currently accept bitcoin worldwide. However, there are still few major US brands that accept this type of payment, such as Paypal, Subway or Cupa Cafe.

“While there are options for accessing value in crypto, such as debit cards and online payment integrations with platforms such as Shopify, the ability to make purchases by transacting directly on a network blockchain is relatively limited. It is likely that the integration of crypto payments by a big company like Amazon or Apple could spark a bullish wave,” CoinTelegraph said.

  • Ethereum Event: The Merge

There is a highly anticipated event within the crypto ecosystem, known as The Merge (see our article on the subject), which is set to take place in August.

Specifically, the Ethereum blockchain (which has its own currency, ether, the second currency in terms of capitalization after bitcoin) would go from a so-called “proof of work” process to that of “proof of stake”. Not only would such a change mean that like bitcoin, ether will require more of a so-called mining process to get into circulation, but this new process will also be much less energy-intensive. Likewise, such a change should reduce the emission of ethers in circulation, implying that with a limited amount, the demand for ether could be greater.

So far, the transition process, which has been years in the making, has been postponed for several months. The community is hoping that it will indeed take place in August, Ethereum boss Vitalik Buterin has announced.

“It’s possible that the hype surrounding The Merge could help lift the crypto market out of its bearish state if the transition goes smoothly, especially if it contributes to greater scalability and a faster user experience,” CoinTelegraph said.

  • Creating a Bitcoin Spot ETF

Another event highlighted that of the creation of an ETF (Exchange Traded Funds), known as bitcoin’s spot in the US markets. As a reminder, an ETF is an exchange-traded index fund that tracks the evolution of a stock index (or of one or more financial assets, such as gold) by replicating both the rise and fall in price. of this index (or of these assets).

This type of project, proposed in 2017, has never come to fruition until now.

“The reasons for this rejection generally relate to the accusation that the cryptocurrency markets are easily manipulated and that the proper safeguards are not in place to protect investors. If a spot ETF were approved, it would already be.” long-standing objection and would provide a new level of legitimacy for bitcoin and the crypto asset class as a whole,” the outlet said.

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