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Things have been very uncertain in the Bitcoin world in 2018 as cryptocurrencies have been in a continued downtrend. According to some experts, the next bull run has been just around the corner all year. But whenever the price surges, it quickly drops back down again. So when will the next big BTC to EUR upswing really begin? And will it sustain next time?
Right now, the Bitcoin price is being held back by a few key factors. Mainly, uncertain market sentiment, setbacks for institutional investors, looming regulation, and ongoing technological problems. Let’s take a look at each of those factors to determine if it’s time for Bitcoin to surge against Euro once again.
Uncertain Market Sentiment
Right now, the hype surrounding Bitcoin is quite different from what it was at the end of 2017. Then, media hype was driving the biggest cryptocurrency bubble to date. Regular people, investors, and news outlets just couldn’t get enough of Bitcoin and were sure the price was going to just keep on rising. When the price rose as a result of this hype-driven demand, even more people got excited and bought in. As it became clear that a price bubble had formed, many started to sell, and the house of cards came crashing down.
The market sentiment is very different now. After repeated disappointments in 2018, most people are much more cautious now. One Wall Street analyst even made an index to measure Bitcoin ‘misery’ to find out how Bitcoiners are feeling. Apparently, based on the current prices, those holding BTC are decidedly miserable right now.
That might sound like bad news, but historically speaking, times of fear, uncertainty, and doubt are the best time to buy Bitcoin. When things are looking bad in the media, the price is much more likely to be undervalued. And, according to that same ‘misery’ index, Bitcoin always sees its best price performance in the year after the indicator hits ‘miserable’.
Setbacks for Institutional Investors
One factor that is likely to drive the next huge Bitcoin upswing is the influx of institutional money. That is when the big investment firms with collectively trillions of dollars decide that investing a small percentage of their portfolio in Bitcoin and other cryptocurrencies could be a good idea.
So far, Bitcoin has been just too risky for the firms that have strong obligations to protect their clients. While many regular people have been happy to risk their own savings on investing in Bitcoin to push the price up, investment funds have been much more cautious. The failed attempts to create important investment vehicles like exchange-traded funds mean that cryptocurrency has remained out of reach for institutional investors.
For the big money to roll into Bitcoin, it would need much better protection for investors. A key step would be for regulators to come in and provide some much-needed clarity in the crypto market. As we’re about to see, that might happen soon.
Regulators are Taking It Seriously
The biggest uncertainty with Bitcoin at the moment is regulation. Regulators around the world are taking a keen interest in Bitcoin. They realize that cryptocurrency is likely to keep growing as a technology, and proper regulation is needed.
However, despite what many Bitcoiners think, regulation might not be all bad for the cryptocurrency, especially for the Bitcoin price. The regulation doesn’t necessarily mean clamping down and restricting Bitcoin from doing its job. Good regulation protects users in an appropriate way while allowing technology to develop and innovate in a relatively free market.
Bitcoiners gained some confidence that regulators might actually help Bitcoin with Hester M. Pierce’s ‘Beaches and Bitcoin’ speech. In the speech, she outlined her vision for the US Securities and Exchange Commission to regulate a lifeguard on a beach, allowing freedom of innovation but stepping in with the whistle when needed. Regulators in Europe have also come out and said that Bitcoin will play a large part in the future financial system.
With a well-balanced regulatory oversight, Bitcoin could shake off a lot of the bad reputation it has regarding market manipulation and scams. Institutional money could start rolling in, and another upswing would be very likely.
There’s Growing Confidence in Scalability
Another key setback for Bitcoin has been its inability to scale. Its limited transaction rate of around 2-3 transactions per second is far too low for mainstream adoption. This is a clear roadblock that Bitcoin needs to overcome, and it needs to do it soon. During the last big upswing, Bitcoin transaction fees rose to over $50 per transaction. Those kind of levels is completely unsustainable.
The good news is that scalability solutions are now in sight. Researchers are working on incredible ideas like the Bitcoin Lightning Network. This solution adds a ‘second layer’ to the Bitcoin blockchain that allows the majority of transactions to happen ‘off-chain’. That means that not every transaction needs to actually settle on the Bitcoin blockchain and pay a transaction fee. If it’s successfully implemented, it could increase the capacity of the Bitcoin network by orders of magnitude. The subsequent market confidence boost would likely be huge.
The Next Upswing Could Be Very Soon
These major factors holding back the next big BTC to Euro upswing are looking likely to improve very soon. Market sentiment is low and pushing the price down, but that could all change very quickly. Helpful regulation would increase confidence in the Bitcoin market and potentially open the floodgates to institutional investor capital. Once those floodgates are open, there’s no going back. If scalability can keep up with these changes, the next Bitcoin upswing will happen quickly, and it will be huge.
Of course, there are also many things that could go wrong in that time too. Be smart, only invest what you can afford to lose and enjoy this exciting ride.