Bitcoin: The Market Needs Catalysts Beyond Legal Wins (Cryptocurrency:BTC-USD)

Thesis

Following the recent Court of Appeals for the D.C Circuit ruling in favor of Grayscale Investments LLC in its lawsuit pertaining to the application to convert its Bitcoin Trust (GBTC) into a spot Bitcoin ETF, the price of Bitcoin (BTC-USD) quickly moved towards the previous $28,000 trading range. However, BTC retraced the price surge of the Grayscale-vs-SEC news in just 2 days, making the bullishness fade quickly. Ripple (XRP-USD) saw a similar surge in its coin price following a ruling in favor of Ripple in its long-drawn brawl with the SEC. XRP gained 74% to trade at $0.82 following the news of the ruling; but has, however, retraced the gains (just like Bitcoin) and is back at the $0.5 price range.

This is why I feel it is essential to separate the bullish headlines from the true catalysts that can propel Bitcoin and the broader crypto market into a new bull season. While recent events, such as Grayscale’s legal victory and XRP’s courtroom triumph, may have caused temporary price surges, they are not the drivers needed for long-term and sustainable price gains. In this article, we’ll delve into some catalysts that could usher Bitcoin into a new wave of value appreciation, based on recent developments in the Bitcoin network and its expanding ecosystem.

Potential Catalysts for Bitcoin Moving Forward

While some headline-making events can cause sudden bullishness, there are a few ongoing developments that investors must understand and identify, in this current cycle, as the catalysts that could sustainably elevate Bitcoin’s value.

Spot ETF Approval

We already witnessed some bullishness that the news of the favorable Grayscale ETF ruling propelled. That was the very tip of the iceberg, compared to how the market will react when a BTC spot ETF gets approved by the SEC. The anticipation of a spot Bitcoin ETF approval has been a lingering hope in the crypto community. It will mark a significant milestone if and when the SEC greenlights an ETF. Unlike the recent legal ruling that merely caused short-lived excitement, a spot ETF will open the doors for institutional investors to flow substantial capital into Bitcoin. The impact of institutional participation cannot be understated, as it has the potential to provide stability and drive long-term growth.

Liquid Staking on the Lightning Network

Beyond the ecosystem expansion and adoption, the Bitcoin network is undergoing transformative changes. New capabilities are being added to Bitcoin. Layer-2 solutions like the Lightning Network have given Bitcoin the chance to go through transformation and upgrades without sparking the usual debates which often lead to hard forks. We witnessed the Taproot upgrade to Bitcoin late last year, and how it gave the Bitcoin network the capability to host NFTs and Bitcoin tokens (BRC-20) through the Ordinal Protocol. BRC-20 has grown rapidly and is considered a top crypto narrative for the coming years.

There are recent reports of the introduction of liquid staking capabilities on Bitcoin through the Lightning Network. Liquid staking has been a top and booming crypto narrative since Ethereum (ETH-USD) completed the Shapella upgrade. A crypto liquid project focused on developing liquid staking capabilities on Bitcoin reportedly raised $3.5 million in a seed funding round. This shows how bringing DeFi capabilities to Bitcoin has begun to take serious shape.

The Halving Event

Bitcoin’s scheduled halving events have historically led to a crypto bull market. Though it is strongly advised not to predict the future direction of the crypto market based on historical outcomes, I still see Bitcoin’s halving as a notable event that cannot be overlooked. The upcoming halving event in Q2 2024 is already on the radar of investors, and it is much talked about by seasoned crypto investors as the countdown to the halving event has already begun. A search of hashtags related to Bitcoin halving on the X (Twitter) app confirms this. Halving is a natural, built-in mechanism that can sustainably drive Bitcoin’s price upward.

I’m Bullish on Bitcoin

As a crypto investor who has witnessed two market cycles, my outlook on Bitcoin is bullish, and I maintain a HOLD rating as we closely monitor unfolding events. The SEC has delayed its decision on all Bitcoin ETF applications till October, as the current deadline elapses. The second deadline for spot ETF applications in mid-October is a crucial date to watch. A successful spot ETF approval would be a significant catalyst for Bitcoin, aligning with the broader trend of institutional adoption.

Conclusion

While recent legal developments have created short-term excitement, focusing on the true catalysts that can sustain Bitcoin’s price surge is essential. A potential Bitcoin Spot ETF approval, liquid staking, and other DeFi and NFT capabilities on the Bitcoin network, coupled with the upcoming halving event in Q2 2024; represent the core drivers that can drive Bitcoin and the crypto market into full bull mode. As we navigate this stage of the market cycle, let’s keep a keen eye on these potential factors that can propel Bitcoin’s value to new all-time highs.

Let’s keep in mind that financial markets are complex and influenced by a broad range of factors that sometimes feel like a labyrinth. Investors should monitor unfolding macroeconomic events that could influence investor sentiment and the crypto market regardless of the potential catalysts highlighted in this article.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.