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Currently, bitcoin's consolidation corridor remains between support near $47,000 and local resistance around $52,000. The price can now reach its lower boundary, and if it holds the major cryptocurrency, an upward rebound is possible.
It is hard to predict how long the consolidation of BTC/USD will last, as well as whether bitcoin will hit $42,000 per coin again. However, it is possible to assess the catalysts that may determine the direction of the main currency in the medium term and the whole market.
The latest cryptocurrency rally was caused by the approval of bitcoin futures ETFs and investors' decision to avoid inflation. Popular cryptanalyst Lark Davis provides seven reasons for optimism that can be considered as drivers of future growth for both bitcoin and the altcoins, following it. Let's analyze them.
The US SEC has rejected spot bitcoin exchange traded funds so far. Chairman Gary Gensler attributes the rejection to concerns about market manipulation. However, the pressure on the SEC is increasing as even former lawmakers are urging the regulator to finally make a decision, as many funds, like Fidelity, are moving abroad.
Lark Davis believes a spot bitcoin ETF is likely to emerge in 2022, and until then, the market is optimistic on expectations.
By comparison, the approval of a spot gold ETF was preceded by a strong rally, followed by a year of declining prices. After that, the price resumed its growth and started a multi-year megarally.
Davis mentions that bull rally cycles become longer as the cryptocurrency market matures and more institutional money flows in it. Unlike previous cycles, which lasted 1-1.5 years, this cycle could last until 2022.
There is growing optimism about the Ethereum network changing from Proof-of-Work (PoW) to Proof-of-Stake (PoS). The expected deadline for this process is around mid-2022. Additional upgrades, such as triple halving and limited segmentation deployment, could increase the number of transactions in the Ethereum blockchain by 3-4 times.
Etheruem competitors such as Polkadot (DOT) and Cardano (ADA) are gaining more prominence in the market. Besides, other projects such as Polygon, ETH L2, Avalanche and Solana will continue to grow.
Along with DeFi, non interchangeable tokens (NFTs) have attracted a lot of public attention this year. Some major global brands have been actively pursuing NFT opportunities recently. Davis believes NFTs could become the key point of access for millions of people to cryptocurrency.
Gaming and the metaverse will likely become two of the largest industries in the next decade. Cryptoprojects operating in this area will eventually become widespread.
Finally, a major factor in the sustainability of the cryptocurrency market and growing demand is institutional interest in cryptocurrencies. With inflation steadily rising, they will have no choice but to invest in digital coins, as it is the only way to increase returns.
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