5 reasons to be bullish on crypto
The last few weeks have seen a lot of good news and positive price movement. The crypto markets are feeling bullish and positive, and this is exciting, but there are also some good reasons to be bullish on crypto long term.
Good things happening in the communities of important cryptocurrencies like Bitcoin and Ethereum give us the primary reasons to have a positive perspective on the maturation of the industry.
With that being said, let’s dive in and have a look at the top five reasons to be bullish on crypto!
1) The Bitcoin ETF
After years of waiting the Bitcoin ETF is finally getting approved! This is massive and it’s one of the best reasons to be bullish on crypto. The ETF is going to be based on futures contracts, which admittedly is not ideal. Most investors would rather have an ETF that holds the underlying Bitcoin, since it would have more of a direct impact on boosting BTC’s price.
That being said, a futures-based ETF is still great for Bitcoin since it will give a new class of institutional investors a chance to put money into Bitcoin. As more endowments, pension funds and corporations own Bitcoin, it makes it that much harder for governments to enact irrational regulations that could crash the market.
A futures-based ETF is a great first step for Bitcoin, and hopefully within the next year the SEC will also approve an ETF that holds BTC. Also, as more investment funds become crypto-literate, nothing is stopping them from buying actual crypto itself, either over the open markets or via custodial trusts like Grayscale.
2) Corporations are buying crypto
The Bitcoin analyst Willy Woo has a great chart that shows how corporations are buying Bitcoin. According to Woo’s data, corporations now own more than 200,000 Bitcoin, worth more than $12 billion at today’s prices.
Looking at the chart it’s interesting to see how corporate exposure to BTC only started about a year ago, and yet these large investors already own approximately 1% of all Bitcoin. If this trend continues, corporations could own 5% of the network within a few years. That buying pressure could be a huge catalyst to drive up the price of BTC. Institutional adoption is another one of the main reasons to be bullish on crypto.
3) Bitcoin Mining has Moved out of China
Bitcoin mining has, by and large, moved out of China, which is incredibly bullish for network security. Previously, one of the primary concerns about Bitcoin was that the Chinese government could force all of the miners in the country to perform a 51% attack. If this had happened it would have been devastating for Bitcoin. However, now that Bitcoin miners are out of China it’s no longer possible.
In fact, the key result of the Chinese mining ban has been that the Bitcoin network is now more decentralized than ever, with no single country controlling a majority of the mining power.
A new report from the Cambridge Centre for Alternative Finance shows that the United States is now the country with the most Bitcoin mining, with American miners accounting for about 35% of Bitcoin’s hash power. Russia is the second-largest hashpower provider, with 18% of all Bitcoin miners.
4)Western Governments are not Trying to Ban Crypto
Most governments in the west have indicated that they’re not going to try and ban cryptocurrency. Here are five of the most notable examples.
- Jerome Powell recently came out and said that, in his position as the chair of the Federal Reserve, he has no intention of banning cryptocurrency. Furthermore, any comments that seemed to indicate that he wanted to ban crypto were misinterpreted.
- Canada has already approved a Bitcoin and Ethereum ETF. The country would be unlikely to approve these financial products if they were planning on banning the asset class.
- Cryptocurrency is fully legal in Portugal and residents don’t need to pay capital gains taxes.
- El Salvador recently made Bitcoin legal tender in their country, and other Central American countries like Panama have indicated that they’re thinking about doing the same.
- A Swiss think tank recently launched an initiative that would make Bitcoin a reserve asset in the country. The likelihood of success is low, but the very fact that this is now a reasonable idea shows just how far cryptocurrency has come in terms of legitimacy.
5) Scaling Solutions are Coming Online
High fees and slow speeds are one of the primary reasons that more people aren’t bullish crypto. Sending a transaction on Ethereum can cost $10, while making a trade on the decentralized exchange Uniswap can easily cost $100. On Bitcoin the fees are lower but getting a transaction confirmed can take half an hour or more.
Scaling solutions are going to solve these problems. Arbitrum, which recently launched on Ethereum, already has $2.2 billion of value locked and the team just announced that a big upgrade is going to reduce fees even further. Optimism is launching on Ethereum at the end of October, and Polygon is also quite popular.
The Lightning Network on Bitcoin, created by Elizabeth Stark, is also growing quickly and its capacity has more than tripled since June of this year. Transactions on Lightning are fast and nearly free, making it a viable way to send small amounts of Bitcoin around the world.
There’s also parachains launching on Polkadot, and the advent of the Solana blockchain, which is highly scalable on the base layer.
By the end of 2022 the cost of using blockchains is going to radically decrease, whereas the variety and availability of decentralized applications will increase, which is one of the most obvious reasons to be bullish on crypto.
Bullish on Crypto
Cryptocurrency adoption is growing at an exponential pace, with some people like Raoul Pal estimating that there will be 1 billion crypto users by 2024. If ever there was a time to get long Bitcoin and the whole asset class it’s now. We listed five reasons to be bullish on crypto, but we could have listed fifty with more time. Blockchain is changing the world and it’s not too late to get involved!
This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.