“It’s been a long and lonely winter,” according to the Beatles. That line could very well be applied to bitcoin’s price movement this past quarter. As governments and businesses cracked down, cryptocurrency markets shed most of last year's gains and tested new lows. Bitcoin’s price, which recently fell below $7,000, is down by approximately 65% from its highs last December.
But analysts and experts are predicting better things for the quarter ahead. In a note last week, analyst Thomas Lee of Fundstrat Global Advisors, stated that bitcoin’s price gains have mostly occurred in relatively short time periods of approximately ten days. Lee has a price target of $20,000 for bitcoin by June. Typically, news events that portend a bullish future for cryptocurrencies are the catalysts for such gains. Here are three news events that investors might want to watch out for in the coming quarter as indicators of positive market movements. (See also: Should You HODL Bitcoin?)
Launch of Bitcoin-Based ETFs
The movement to launch crypto-based ETFs has gained steam in the last couple of months with several companies lobbying regulatory agencies or introducing similar products in OTC markets. Even Cboe is calling for bitcoin ETFs, as shown by its recent letter to the SEC. Alongside these developments, the cryptocurrency ecosystem is also being cleaned up to allay the SEC’s concerns, outlined in a letter earlier this year. For example, the Winklevoss twins have outlined a set of proposals to form a regulatory body for cryptocurrency exchanges to prevent hacks and insider trading. The run-up to the introduction of bitcoin futures at CME and Cboe bumped up bitcoin’s price by 70% last December. (See also: Bitcoin Price Rallies On Futures Debut). A similar occurrence may precede announcement of bitcoin ETFs.
Changes To Ethereum’s Blockchain
Bitcoin may be the original cryptocurrency but Ethereum has the business world excited. That may be the reason why it was the only other blockchain, besides NEO, to buck the trend of falling prices for most of this quarter. A major reason for this is its smart contract platform, which is gaining traction among businesses and financial institutions. Meanwhile, Vitalik Buterin, a co-founder, has suggested changes to bolster its governance structure and increase its economic value. These changes include charging rent for storing user data on its blockchain and considering a hard cap on the numbers for Ether, its cryptocurrency, in circulation. These measures should increase the attractiveness of its blockchain.
Regulation is the dark horse in cryptocurrency markets. As much as cryptocurrency enthusiasts like to decry the effect of governments on financial instruments, the prices of bitcoin and other cryptocurrencies are influenced by intervention and pronouncements from regulatory agencies. For example, the slump in cryptocurrency markets gathered pace in February after reports that the South Korean government was planning to clamp down on exchanges. Similarly, cryptocurrency markets swung to highs on the back of news that Cboe and CME were planning to introduce bitcoin futures. Positive news pertaining to the introduction of derivatives or the status of bitcoin or other cryptocurrencies in other jurisdictions will likely move cryptocurrencies higher. (See also: Winklevoss Twins Unveil Proposal For Self-Regulation Of Cryptocurrency Markets).
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