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Report: The Next Bitcoin Bull Run Coming When U.S. Crypto Laws are Clear, Inflation Drops

Published June 21, 2023 2:25 PM
Darryn Pollock
Published June 21, 2023 2:25 PM

Key Takeaways

  • The wider cryptocurrency markets are bracing for a Bitcoin breakout, with the next halving a year away.
  • Nansen says clear U.S. cryptocurrency laws need to be established to reaffirm investor confidence.
  • Inflation needs to come down to spark a concerted BTC rally.

Market analysis offered by a researcher from blockchain analytics firm Nansen  suggests that the next Bitcoin bull run will be dependent on United States regulators giving clear guidelines for the ecosystem and lower inflation rates.

Nansen’s principal research analyst Aurelie Barthere suggests that cryptocurrency selloffs are ‘becoming shallower’ as indicated by the ‘relatively muted price reaction’ of both Bitcoin (BTC) and Ethereum (ETH) following the U.S. Securities and Exchange Commission (SECs) launching legal battles against Binance.US and Coinbase.

“Overall, our view is that more regulatory clarity and also a clearer path for lower inflation are two necessary conditions for crypto prices to break higher. In the meantime, it looks like the low-volatility range-bound price action might last longer.”

Central Bank Narratives Changing

Barthere’s analysis highlights a changing narrative of central banks around the world, with the likes of US Federal Reserve Bank and European Central Bank describing the current state of inflation as ‘stubborn’.

Inflation is said to be decelerating around the world driven by normalizing energy and commodity prices. This has led to core inflation rates remaining around 5-6 percent year on year with the U.S. as a prime example. CPI data released in May had inflation at 5.3%.

What it Means for Crypto

Barthere suggests that the less investors and policymakers are concerned about economic growth, the longer fiscal policies will remain restrictive. 

“High rates for longer will keep a lid on crypto prices. We reiterate this simple observation that staking ETH for an annual yield of ~5% is less attractive than investing in 5%+ US Treasury bills, when considering the risk profile of the former.” 

She contended that the cryptocurrency sell-offs have become shallower in recent months, despite the ‘stubbornness’ of inflation and restrictive monetary policy in Europe and the U.S. that has created an “increasing headwind for risk assets” like cryptocurrencies.

This also indicates that regulatory scrutiny of the cryptocurrency space and unforeseen negative news events have been priced into the value of BTC.

Regulatory Clarity Needed

Regulatory oversight has been a major talking point in the cryptocurrency space in both the U.S. and Europe in recent months.

For American cryptocurrency users, 2023 has been tumultuous, largely driven by the SEC’s pursuit of lawsuits against Binance.US and Coinbase in two separate cases pinned on allegations of unregistered securities offerings on the two exchanges.

While Coinbase has implored the SEC to come up with clear regulatory guidelines for the cryptocurrency industry, mainstream financial players seem to be gearing up for major moves into decentralized finance markets once again.

The world’s largest asset manager BlackRock grabbed headlines after applying for clearance to offer a Bitcoin exchange-traded fund (ETF) which left cryptocurrency proponents bullish on the potential impact it would have on mainstream adoption.

Meanwhile, EDX Markets, a new self-custody cryptocurrency exchange, opened trading for Bitcoin, Ethereum, Litecoin and Bitcoin Cash on its platform which is backed by a number of household names in the venture capital and investment firm space.