Bears have dominated the last three quarters in the Bitcoin market. But the sentiment is about to reverse, according to Changpeng Zhao.
The gutsy prediction found its support in the comparison of trading volumes. Zhao said that while the volume on exchanges like Binance has fallen hugely since January, it still appears strong in contrast to the amount recorded at one-two years ago.
“Compared to January [of 2018], we are probably down 90 percent. So we only have one-tenth of the trading volume compared to what we had in January. But, compared to like a year or two years ago, we’re still trading at huge volumes. Business is still okay, we are still profitable, and we are still a very healthy business,” Zhao told CNBC.
Bitcoin has mostly been untouched by macroeconomic factors. But the digital currency’s growing popularity among Wall Street circles has led investors to take it seriously. As a result, a Bitcoin exchange-traded fund (ETF) is now waiting to enter the mainstream upon a green signal from the U.S. Securities and Exchange Commission (SEC).
Bulls have eyed at the launch of a Bitcoin-backed ETF for a long time. The start could bring multibillion dollars worth of investment into the digital currency derivative product. It could lead to a massive spike in Bitcoin’s value as investors become more confident about an SEC-regulated product. VanEck, the investment firm behind the ETF, also projected a minimum $1 billion investment if the U.S. regulator allows to launch it.
“Our Gold ETFs are already in a few billion dollars range,” said Gabor Gurbacs, the chief strategies at Vaneck. “There are Gold ETFs in $10 billion range as well. I wouldn’t be surprised if a Bitcoin ETF gets in a few billion dollars range.”
Meanwhile, Zhao considers institutional interests as a major catalyst behind the next Bitcoin rally. In a medium post published on November 9, Binance announced laying the groundwork for institutional capital to enter the crypto space. The exchange said that high-net-worth individuals (HNWIs) would expand their investment portfolio by integrating crypto-assets like Bitcoin.
“The recent closure of a strategic investment round led by Vertex Ventures will facilitate a future fiat-to-crypto gateway in Singapore — just one milestone in our path to future growth in preparation for the institutional adoption of cryptocurrency as a new asset class,” Binance stated.
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Bears have failed to secure weekly lows below $5,820, according to BitFinex. They have been unable to extend their downtrend action four-five times already. So, it seems safe to say that Bitcoin’s long-term bearish market has bottomed above the said level.
At the same time, there is an equally stubborn resistance zone that has kept Bitcoin from establishing a sustained upside. The price action has been calmer than before as volume continues to dwindle. Analysts believe that $6,000 is a break-even level for miners and they would likely be holding their Bitcoin rewards unless a more profitable exit comes around.
Bitcoin ETF approval and the launch of Bakkt, an ICE-backed cryptocurrency exchange, combinedly project a strong bullish case for Bitcoin. Nevertheless, in the event of a rejection, the ETF fundamental could harm the market as much as it could have benefitted it.
Alex Krüger, a well-recognized cryptocurrency trader and technical analyst, supports the theory, believing that Bitcoin will profit from the Bakkt launch, but will continue to face threats from a potential ETF rejection.
“Possible outlook for BTC: First, a bull run on BAAKT & renewed ETF approval narrative early 2019. Second, ETF denied Feb/27, massive crash, goodbye 6k, hello 4k, cleanse all weak hands. Lastly, halvening 2020 narrative and re-adjustments lead to a sustained bull run for the rest of 2019 & 2020.”