Why October could be a decisive month for Bitcoin to hit $100,000, analysts say – Cryptocurrencies

SAO PAULO – The Chinese government’s most recent measure against the cryptocurrency market has not affected the price of Bitcoin (BTC) in the same proportion as the crisis that took place in May this year, and its ability to overturn expectations of the most optimistic for October was even smaller. .

The month ahead is historically bullish for Bitcoin, and the belief that the current cycle has not yet ended fuels hopes that new highs could arrive in 2021. One of the anchors of this idea is the smaller size of the surge in cryptocurrency price so far compared to recent bullish cycles.

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The move that sent Bitcoin skyrocketing more than six times, from about $10,600 on Oct. 1, 2020 to nearly $65,000 in April 2021, in the view of some analysts, should be at least the same as in previous years – and since it was not, the cycle would not be complete.

According to estimates by the technical analyst and founder of Enfoque, Fausto Botelho, the appreciation of the first cycle of Bitcoin applied to the current market would take the price to at least US$ 1 million. A more conservative projection, taking into account the rally that ended at the end of 2017, points out that the top of the current cycle would be between US$ 100,000 and US$ 200,000.

But where would the money come from? For some analysts, the answer is clear: large investment funds are already exposed or eyeing Bitcoin, and there is no lack of equity in low-yield instruments ready to be allocated in crypto.

“The investment of Venture Capital funds in crypto companies is at a surreal level, with companies doing rounds of 200, 500, 800 million dollars. It’s money to hire people, there is a brain drain from the financial market and tech for crypto”, points out Bruno Sousa, Legal and Compliance Director at Hashdex.

The numbers are not exaggerations. Just last week, Venture Capital funds invested $200 million in a new cryptocurrency social networking project, and another $431 million in mining company Genesis Digital Assets.

regulatory uncertainty

However, institutional money allocated directly to crypto and which pushed prices up in 2020 has stagnated this year. More sensitive to volatility, the big hedge funds would have been pleased with last year’s rally and taken profits. At the same time, they saw less need to protect themselves from a generalized crisis with an asset uncorrelated to traditional markets.

On the other hand, the current regulatory environment does not help. In addition to the Chinese crackdown on cryptocurrencies, the US Securities and Exchange Commission (SEC) is raising the bar on the crypto market and suggests that widespread regulation may be underway.

Theodoro Fleury, manager of QR Asset Management, points out that institutional investors are hoping for a relief in tensions between the crypto industry and regulators, as well as clearer macroeconomic signals that encourage the search for safe haven assets, as a repeat of what was seen in 2020 in Coronavirus crisis.

“It’s not that institutional interest is over, [mas] to have a stronger buy movement trigger by this type of investor, it is necessary to have a more macro market signal. Bitcoin is on hold”, he assesses.

Fleury highlights Bitcoin’s record of high in October and the last quarter as a whole, but is cautious with the price in the short term. One reason is the low premium of cryptocurrency in the derivatives market, something that tends to rise in bull markets. On the other hand, he is sure that the current cycle is not over – it just doesn’t crash when it will resume.

Bitcoin ETF

The big investor is hesitant, but analysts are betting big Bitcoin-related news could help create a new catalyst. For October, only talks about the possible approval of the first Bitcoin ETF in the United States.

Several cryptocurrency ETFs have been submitted to the SEC by VanEck, WisdomTree and Goldman Sachs, among other banks and managers, but none have yet been approved. However, the market is working with the hypothesis of an October release of at least one Bitcoin futures ETF after public suggestions from regulators that such a product could be well received.

Since then, several managers have changed the orders, raising the expectation for approval. Although a futures ETF is not ideal, it is already seen as being able to excite the institutional investor, who needs regulated vehicles to expose themselves to cryptocurrencies.

“It would certainly be great news, and it has the potential to pull prices because it changes the scenario a little,” says the Hashdex executive, noting that any non-approval, on the other hand, should not negatively impact the crypto markets. Hashdex, it is worth remembering, is also in line to obtain the approval of a cryptocurrency ETF in the US, “brother” of HASH11 (HASH11) traded on the Brazilian stock exchange.

Alexandre Vasarhelyi, manager of BLP Crypto, welcomes what some call regulatory uncertainty, especially given the prospect of obtaining approval for the first Bitcoin ETF in the US. “The more the SEC looks into the universe of cryptoactives, the more likely it is to pass an ETF. What they will never do is pass an ETF without studying,” he says.

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