Digital currencies have been suffering a general malaise, trading largely range-bound as many investors sit back and wait.
The bear market, which has seen cryptocurrencies lose more than 75% of their value, has continued since earlier this year, and now traders are waiting for the next major development to prompt more robust activity.
Before these digital assets leave bear market territory, “we need a catalyst to spark interest,” said cryptocurrency analyst Garrett Keirns.
For now, “The interest is just not there,” he stated. “Google Trends says the search term ‘bitcoin’ is the lowest it’s been all year.”
[Ed. note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Bitcoin has been in a “sideways market for some time,” said Marius Rupsys, a digital currency analyst.
He emphasized that “2/3 of all fiat came to crypto in Nov and Dec 2017, when price was growing exponentially.”
However, the tides have turned, and “Now these people are leaving given they are in loss from couple % up to 70%.”
“People are afraid of losing money,” said Keirns, “especially the Coinbase retail crowd who bought in at $10k+.
“In addition to a slumping crypto market, these folks are starting to see their 401k and equity portfolios losing steam,” he added.
“From their perspective, bitcoin is a much riskier asset class, meaning the cautious investor isn’t likely to substitute crypto when he/she sells out of equities.”
As for what could help digital currencies break free of this situation, analysts mentioned a few possibilities.
One factor that could break cryptocurrencies out of their current doldrums is institutional interest, said Nigel Green, founder and CEO of financial consultancy deVere Group.
“We’ve seen – and are continuing to see – that there is an increasing feeling, especially amongst institutions, including financial ones, that they feel that they now need to explore digital currencies – and fast – or their rivals could get way out ahead and they might not be able to catch up,” he stated.
As more of these institutions get involved, it could trigger Fear Of Missing Out (FOMO), which could help bolster interest in cryptocurrencies.
Should the U.S. Securities and Exchange Commission approve a bitcoin exchange-traded fund (ETF), that decision would serve as a “major catalyst,” stated Oliver Isaacs, blockchain investor, advisor & influencer.
“The approval of a Bitcoin ETF will open the floodgates for new investors to pour billions of dollars into cryptocurrencies with the same ease in which they invest in stocks and all other mainstream asset classes.”
Isaacs emphasized a similar situation with gold, as “The precious metal increased more than 300% in its price in the aftermath of the first ETF approval back in March 2003.”
Should bitcoin experience the same price increase, it would be worth $22,500, he noted.
Disclosure: I own some bitcoin, bitcoin cash and ether.