Crypto Outlook: Diverging Perspectives

Martin Walker
Sep 22, 2023 at 06:14 am

The upcoming crypto bullish trend will be drastically different from the previous one, prompting investors to manage their expectations regarding an immediate surge in cryptocurrency prices.

In a recent conversation, Lars Seier Christensen, the founder of Concordium, a blockchain enterprise, expressed skepticism about the anticipated enthusiasm for a slew of proposed exchange-traded funds tied to Bitcoin (BTC) with a bullish outlook. He suggested that the approval of these funds might not immediately propel the crypto markets, casting doubt on the likelihood of Ethereum and other older altcoins rallying alongside.

Even if you do get a Bitcoin rally — I don't think you should naturally assume that everything is going to rally with it.

Christensen noted that while digital asset prices have experienced a lull over the past 18 months, there remains a persistent interest in blockchain technology from the corporate sector.

He predicted that the industry's next major progression wouldn't manifest in an exciting price rally, akin to the surge witnessed in 2021. Rather, he foresees a gradual and more subdued growth unfolding over the next 18 months.

However, not everyone concurs with Christensen's viewpoint. Ben Simpson, the founder of Collective Shift, a crypto education platform, pointed to a wealth of data and indicators suggesting that the initial phases of a Bitcoin bull market are already underway.

The only reason corporate types need a crypto asset is in order to execute what they want to do on a given blockchain. So, I think it's very clear that you need to be aware that they're not in desperate need for a given crypto to increase significantly in value.

Simpson highlighted metrics such as the drawdown from the All-Time High chart and the Market Value to Realized Value Ratio (MVRV), indicating that we may be approaching the culmination of the accumulation phase—a precursor to a bull market.

Regarding assets primed for a significant surge, Simpson believed the next bull market would breathe life into Bitcoin, Ether (ETH), and application-specific tokens, as well as sectors like gaming.

 DeFi tokens are risky but offer significant upside, and Bitcoin I believe emerges as the 'silent winner' amid broader adoption and one I'm most bullish on.

The crypto industry has faced challenging times in the last two years, grappling with a more hawkish U.S. Federal Reserve and notable collapses in prominent platforms like FTX and Celsius Network. These events have led to a decline in investment and subsequently pulled down the prices of crypto assets.

With the U.S. Federal Reserve opting to pause interest rate hikes, eToro Markets analyst Josh Gilbert viewed the broader macro outlook optimistically. He anticipated an improved macro environment, with central banks globally signaling potential rate cuts. Gilbert suggested that as rates decline and inflation eases, investors would embrace more risk, directing additional capital into financial markets—with crypto taking center stage.

Echoing sentiments shared by many market commentators in recent months, Gilbert anticipated a potential rally in the coming year.

On the other hand, Tina Teng, a market analyst from CMC Markets, cautioned against premature optimism regarding massive gains on the horizon. She advised investors to brace for a new wave of uncertainty, emphasizing that it's too early to determine the beginning of a crypto bull market. Teng emphasized the importance of the macroeconomic environment and the stance of central banks in either ending or continuing their rate hike cycles, indicating that a bullish trend historically coincided with the Fed's rate cut cycles rather than hiking cycles.

For Teng, a bullish market thesis would only be validated if Bitcoin manages to surpass the 50-day moving average and embarks on another upward surge.

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