Optimism Returns to the Crypto Market: What’s Driving the Change?
Coin enthusiasts are breathing a sigh of relief: the cryptocurrency market is making a comeback.
After Bitcoin dropped from an all-time high near $64,000 in April to a low of $29,000 in July, Bitcoin, Ethereum, and other digital coins have slowly inched their way back. The global cryptocurrency market cap now stands around $1.9 Trillion, CoinGecko reported Sunday. While that’s still short of the total market’s all-time high of over $2.3 Trillion reached in May, it’s proof that positive sentiment is driving the market once again.
What’s behind the turnaround?
“The crypto price rally—led by top ten tokens by value ethereum, dogecoin, and uniswap and adding $300 billion to the market over the last week—comes after Ethereum underwent a closely-watched upgrade this week, helping Ethereum far outpace bitcoin and raising expectations of the so-called ‘flippening,” explained Billy Bambrough, a senior contributor at Forbes. The upgrade, called the “London Hard Fork,” helped push the price of Ether to the $3,000 range at the end of last week.
Speculation that Ether could overtake Bitcoin in market cap is the basis of the “flippening” theory. The Ethereum network, which has experienced severe congestion and high fees, has been working to alleviate pain points on its blockchain. Its anticipated move to the more energy-conscious Proof of Stake (PoS) mining model is also expected to give Ether an advantage over Bitcoin. Both currently use the Proof of Work (PoW) model, which came under fire earlier this year for its energy consumption and is viewed as a factor in the May market dive.
Signs from corporations also were cause for continued optimism.
After the market downturn in May, most large institutional investors and corporations became conservative in their stance on crypto. However, some held the course. And others continued to move toward the adoption of digital currencies. The global convenience store operator Alimentation Couche-Tard went ahead in July with its plan to install Bitcoin Depot® ATMs in 700 Circle K brand U.S. and Canadian stores.
“Bitcoin Depot® ATMs are kiosks that enable users to exchange cash for cryptocurrency, allowing for simple, in-person transactions that give users immediate access to bitcoin and over 30 other cryptocurrencies,” the company said in a July 22 news release. “The growth of digital currency has led to large retail companies finding growing interest in Bitcoin ATMs. As one of the world’s leading convenience and fuel retailers, Circle K is the first major retail chain to deploy Bitcoin ATMs within its stores.”
Alimentation Couche-Tard company operates more than 14,000 stores in 26 countries and territories around the globe, creating speculation that the company may expand the ATM program to its other stores if proven successful.
In addition, two of the world’s largest and most influential corporations have signaled they are moving in a crypto direction.
Amazon posted in July a job description for a “Digital Currency and Blockchain Product lead.”
“The Payments Acceptance & Experience team is seeking an experienced product leader to develop Amazon’s Digital Currency and Blockchain strategy and product roadmap,” the post states. “You will leverage your domain expertise in Blockchain, Distributed Ledger, Central Bank Digital Currencies and Cryptocurrency to develop the case for the capabilities which should be developed, drive overall vision and product strategy, and gain leadership buy-in and investment for new capabilities.”
Apple Corporation also posted in June a job posting titled “Business Development Manager – Alternative Payments.” The post “explains that its job would include creating partnerships and launching new programs and features for Apple’s Wallets, Payments, and Commerce team,” Nasdaq.com reported. Among the experience required is working with “alternative payment providers, such as digital wallets, BNPL, Fast Payments, cryptocurrency and etc.”
Optimism remains in the face of U.S. regulatory fight over taxing the crypto market.
Even as the U.S. continues to wrangle over last-minute crypto regulations attached to the $1 Trillion Infrastructure Bill, signals from lawmakers remain positive.
The crypto amendment is aimed at collecting taxes from the crypto world. Determining just who would be taxed is being hotly debated and is credited with slowing down the bill’s passage. U.S. Crypto lobbyists have entered the fray, making their voice known in Washington.
“Regardless of the measure’s ultimate fate, the fact that crypto regulation has become one of the biggest stumbling blocks to passage of the bill underscored how the industry has become a political force in Washington — and previewed a series of looming battles over a financial technology attracting billions of dollars of interest from Wall Street, Silicon Valley and financial players around the world, but that few still understand,” the Wall Street Journal reported Saturday.
Traders and HODLers understand all of this interest in crypto very, very well.
“#Bitcoin and crypto is no longer a nice group,” Cameron Winklevoss of Gemini.com tweeted Sunday. “We are a movement of tens of millions and growing. Our industry will be the dominant economic growth engine in this century. We care about the future that we are building and we’re determined to have a seat at the table.”
Joyce Pavia Hanson