Despite the recent drop in quotes, the price of bitcoin has increased by 27% since the beginning of the year. What incentives can contribute to a further rise in the price of a cryptocurrency, and what experts think about this?
Despite the large-scale collapse of quotations, since the beginning of the year, bitcoin has grown by 27% and as of May 25 is trading at $ 37.5 thousand. The last time the main cryptocurrency updated its maximum on May 14 at $ 64.3 thousand. After that, the quotes went down. However, there are several reasons at once that can positively affect the prospects of the asset.
Development of green mining
Bitcoin has risen sharply against the background of the meeting, which Tesla CEO Elon Musk and SpaceX conducted with North American miners, Bitcoins. The businessman discussed with industry representatives the use of renewable energy sources. The meeting was promising, Musk said.
Previously, Tesla abandoned the sale of electric vehicles for bitcoins due to the non-environmentally friendly way of mining them. Musk stated that Tesla cannot afford to harm the environment, so it will not accept cryptocurrency as payment until it starts mining with renewable energy sources.
The problem of bitcoin mining is not primarily outraged by Musk, but by the global green community, says Sergey Troshin, head of the Six Nines data center. According to him, the crypto community has received a demand to make mining more environmentally friendly, otherwise, at the government level, electricity sanctions and other measures may be imposed.
The share of green and renewable energy in cryptocurrency mining in North America is quite high, says Nikita Zuborev, senior analyst at Bestchange.ru. He cited a study by the Center for Alternative Finance at the University of Cambridge, according to which more than 60% of miners in North America use electricity from hydroelectric power plants.
The policy of the Chinese authorities forces miners to move their capacities to other countries, which in turn may have a large percentage of “green” energy, the analyst explained. In his opinion, in the future, this will not only help ease the pressure of the world media on cryptocurrency, but also strengthen the decentralization of bitcoin.
“All this will contribute to the resumption of the bullish cycle, which may mean a return to the previous positive scenario – setting a new record in the form of a six-digit price in US dollars,” Nikita Zuborev emphasized.
ETF and investment instruments
Against the background of the growth of cryptocurrency quotes this year, the US Securities and Exchange Commission (SEC) began to receive applications for the creation of a Bitcoin ETF. The regulator has been approached by companies such as Fidelity Investments and VanEck . The last application was accepted by the SEC in mid-March, but later the commission extended its consideration for 240 days. At the moment, the regulator has not approved a single cryptocurrency-based exchange-traded fund.
The launch of the bitcoin ETF will create additional opportunities for institutional entry, but this is just a tool that is not the main condition for the entry of “whales”: some of them are already in the market even without various financial instruments, explained Viktor Pershikov, a leading analyst at 8848 Invest.
Bitcoin ETF is a useful tool that allows you to invest in an asset without actually buying it, said Sergei Troshin. In his opinion, the American regulator will sooner or later approve this tool and investors will be able to use it legally.
“The legalization of cryptocurrencies is useful, because now it is not regulated by anything, because no one can attract Mask for manipulating the market. He first buys bitcoin, then writes bitcoin on Twitter, and then sells, earning on the growth of the rate, “added the head of the Six Nines data center.
On May 24, cryptocurrencies management company One River filed an application with the US Securities and Exchange Commission (SEC) to create the world’s first green Bitcoin ETF Carbon Neutral Bitcoin Trust. The Exchange Traded Fund will offset carbon emissions through the purchase and use of carbon credits.
Institutional Investor Inflow
In February, Tesla announced a $ 1.5 billion investment in bitcoin. The automaker recently released a financial report for the first quarter of 2021, in which it announced the sale of 10% of bitcoins for $ 262 million. The company managed to record a profit of $ 101 million.
At the moment, MicroStrategy is the largest holder of digital coins among public companies. The software manufacturer owns 92,000 bitcoins. The average purchase price of one coin is $ 24.4 thousand.
Large investment banks are also starting to use digital assets. For example, Goldman Sachs became the first among the oldest US banks to create a department for cryptocurrency trading. And JPMorgan will allow its clients to invest in digital currencies in the second quarter of this year .
The trend towards an increase in the number of institutional participants in the field of cryptocurrencies will continue in the future, says Viktor Pershikov. So far, the scenario with a fall in inflationary assets has not materialized on classical markets, but this may happen already this year, the analyst believes. According to him, against this background, bitcoin and cryptocurrency, as a rescue tool from dollar inflation, will be in high demand from the “whales”.
“The main goal of the recovery by the fall of next year is to exceed historical highs and reach the level of $ 70 thousand,” the analyst added.
In the coming months, the market will move, mainly in a wide sideways, creating conditions for the resumption of growth, so in the second half of the year one should not expect significant growth, said a leading analyst at 8848 Invest.
In the not too distant future, we will see how investing in the crypto market will become something commonplace for corporations, Nikita Zuborev predicted. Most likely, in the coming months, the trend for a kind of “coming out” among funds and billionaires will continue, and we will see new recognition from media companies, he added.
“As long as cryptocurrency is on the agenda, big capitalists will continue to use it for their own purposes,” the analyst noted.
Yesterday it became known that the famous investor and founder of the hedge fund Bridgewater Associates, Ray Dalio, owns bitcoins. According to him, in the current environment, the main cryptocurrency looks like a more attractive store of value than gold. Also on this day, Goldman Sachs recognized bitcoin as an asset class in its adoption phase.
