Serhiy Tron: Investment hunger in the world, Asian activity and war in Ukraine – three reasons for the growth of Bitcoin to $30 thousand and higher
Bitcoin has all chances to reach the level of $30 thousand in the first half of 2023, and later start moving to $35-40 thousand, even against the background of restrictions of American regulators and the continuing warnings of Europeans about the risks.
The concerns and fears of Western regulators are not going anywhere, they always have been and always will be. After all, it is their job to steer investors toward traditional finance. However, the progress of cryptocurrencies is unstoppable, and there are at least three factors that will stimulate interest in Bitcoin.
First of all, there is no shortage of investment assets in the world, which has been fixed in recent years. We do not see a wave of new promising projects that could attract the interest of investors, which makes them look at the cryptocurrency market more often than usual. Just the opposite. According to preliminary estimates, the number of IPOs (initial public offerings) in the world in 2022 decreased by 45% (to 1333), and the maximum fall was recorded in the fourth quarter, when the market went only 334 companies and raised only $ 31.9 billion. This is the minimum for the last 10 years, proving a failure in the investment segment. It is caused by two key reasons: growth of interest rates and inflation. And the growth of rates, judging by the actions and forecasts of the U.S. Federal Reserve, will not stop in the near future.
Secondly, there is an increase in investment activity in the crypto market from the Asian region, where I see a big prospect and investment volumes. It is stimulated by local regulators. For example, authorities of Hong Kong, which claims to be the Asian crypto-hub, in the fall of 2022 promised to legalize retail operations with crypto and other digital assets and exchange-traded investment funds working with these assets starting June 1, 2023.
It is widely known that the Securities and Futures Commission (SFC) of Hong Kong has announced requirements for exchange-traded investment funds that purport to obtain licenses. It is working on legalization. Initially, the investment funds will be able to invest in bitcoin and ether futures, after which their capabilities are promised to expand. Investments in bitcoin and other assets in the region will be undoubtedly increasing, driving the growth of the entire market – Asia will be the driver.
It is a shame that Western regulators are going in the opposite direction at this time. The US Securities and Exchange Commission (SEC) is tightening its regulation under the slogan of increasing safety for US retail investors in the crypto-asset market, although not everyone can understand these reassurances. And the European Central Bank urged banks to minimize their investments in the crypto market. However, the openness of their Asian counterparts may lead to a capital reorientation in a different direction and an increase in investments in bitcoins and other coins.
And third, the war in Ukraine has expectedly increased the overall military-political instability on the planet. At the same time, it provoked a flow of capital to the crypto market to increase the secrecy of investments and settlements. From this perspective, the demand for Bitcoin regularly grows, supporting its quotations.
Bitcoin has been climbing steadily since December 2022. During the first two weeks of 2023, it quickly climbed from $16,600 to $20,700 per coin, and has recently been moving around the $24,000 mark, from time to time reaching $25,000. Considering everything mentioned above, I would say this level is breakable, with a further positive trend upward.
Certainly, corrections and wagering on unflattering news are also possible. Echoes of FTX's bankruptcy will continue to be heard, as happened the other day with Galois Capital, a cryptocurrency hedge fund that managed $200 million in assets and was reported closed because of the collapse. Temporary downturns, however, will not be able to stop the overall upward movement.