Is crypto winter finally coming to a close?

Is crypto winter finally coming to a close?
Is crypto winter finally coming to a close?

Summary

In a note published on Monday, Standard Chartered analyst Geoff Kendrick wrote that Bitcoin could potentially hit $100,000 by the end of 2024

After almost a year of downturn, the crypto markets seem to be rising once again. Analysts are predicting sky-high prices too, and Bitcoin is once again the poster boy for the resurgence. Is this the end of crypto’s winter of discontent? Mint examines:

What are the predictions?

In a note published on Monday, Standard Chartered analyst Geoff Kendrick wrote that Bitcoin could potentially hit $100,000 by the end of 2024. He noted that the crisis in the traditional banking sector, including the Silicon Valley Bank crisis, have given impetus to Bitcoin and the crypto winter is finally over. He also added that Europe’s regulation of crypto “should provide a tailwind" for Bitcoin. This comes a few weeks after JPMorgan predicted an upward movement in Bitcoin’s price due to a technical change in the cryptocurrency’s underlying blockchain, called “halving", which makes it more expensive to produce.

Are these the only predictions?

No. While Standard Chartered and JPMorgan’s analysis may have caught people’s attention, Bitcoin has been rallying throughout 2023. In fact, the world’s most valuable cryptocurrency breached the $30,000 mark earlier this month for the first time in ten months. Though it has fallen since then, experts have noted that the fall of Silicon Valley Bank and other crises among US banks have reaffirmed enthusiasts’ belief that the crypto system isn’t affected or controlled by central authorities. This, though, may not necessarily be true, since crypto markets have also been known to take a tumble alongside traditional stock markets in the past.

Graphic: Mint
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Graphic: Mint

What does ‘halving’ have to do with it?

Bitcoin’s ‘halving’ happens every four years. It increases scarcity of Bitcoin, which in turn increases the price. Bitcoin prices have usually risen around this event, and the next halving is due in roughly a year. The three halving events till date have all corresponded with a surge in Bitcoin’s price, with the first happening at a time when its price surged by almost 100 times.

Can there be other reasons for this rise?

Yes. For instance, the Ethereum blockchain was invented in 2015, roughly a year before Bitcoin’s third halving. This gave rise to ‘decentralized apps’, or dapps—apps built on decentralized blockchains—which have provided more impetus to crypto ecosystem than anything else in its short history. Dapps provided utility to these digital currencies, and led Ether to become the second most valuable crypto in the world. Other reasons include formation of large crypto exchanges, and big banks taking note of the industry.

Is this a possible bull run?

Even as some experts expect a bull run for crypto once again, they do not expect it to last forever. Crypto market has gone through multiple bull runs in its short history, and they’re always followed by a bear phase. No one expects volatility in the crypto markets to disappear magically, and even though the industry cites government regulations as welcome moves, some may still hurt the industry and investors’ ability to invest in digital assets. Lastly, a bull run doesn’t negate possibilities of fraud, as seen in the case of FTX.

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