News - Is the crypto market currently in a sweet spot?

By Ted Maas

Is the crypto market currently in a sweet spot?

Bitcoin (BTC)

We are currently experiencing "green" weeks in the crypto market. The right timing can lead to more profits. Multiple factors suggest that we are currently in a sweet spot (the perfect spot for maximum impact).

For most people, the crypto market no longer seems all that relevant. Since the huge drop in 2021, there has been no national attention. Occasionally a significant rise in the Bitcoin price makes it into the mass media, but that's all. The topic is not present for those who are not continuously involved in the industry - which is probably more than 95 percent of the population.

Crypto-adoption: better than ever

At the same time, companies and institutional investors are increasingly turning their attention to the topic. For example, Siemens is issuing bonds on the Polygon network and make their payments through a JPMorgan Stablecoin, while Deutsche Bank is about to issue crypto ETPs. At the same time, Lufthansa has launched a loyalty program through NFTs. For those who follow the industry, this kind of news is just another day.

The vacuum between public opinion and actual fundamental development is larger than it was in 2020. This was during the last major rally. For an investor, this is precisely a favorable environment, a so-called sweet spot. Institutional investors have not yet entered the market and the broad masses are not engaged.

Macro situation: the perfect starting position

The sweet spot is also there in macroeconomic terms. After the huge decline and huge interest rate hikes, many cryptos fell sharply. Although prices have recovered slightly since then, they are still well below the ATHs of the 2021 hype year.

Once new liquidity enters the market, prices will naturally rise. For this prospect, we are also in favorable territory: all the negative macroeconomic events are behind us, at least according to the latest reports, and with declining inflation and the huge debt problem, the next monetary influx can be right around the corner.

The right valuation

Every euro, dollar or Swiss franc one invests in a protocol like Ethereum, Chainlink or Polygon today ensures that more and more mature projects are built onto the network. Without real hype, there is room for actual development. This means that the protocols are fundamentally approaching the value they wrongly had at the time, during the hype year of 2021. Thus, the current price increases are not the result of hype, but legitimate catch-up effects as progress is made in areas such as compatibility, scalability and the creation of use cases.

Cryptoregulation: the cards are shuffled

The main attack against crypto in the US seems to have reached its peak. The aggression of the US Securities and Exchange Commission (SEC) is leveling off, and with the conviction of Sam Bankman-Fried, regulators also seem to be slowly finding their peace. Major court rulings between the crypto sector and the SEC, such as with Ripple or Grayscale, have turned out in favor of crypto players.

At the same time, asset managers on Wall Street are about to create legitimacy for the sector with Bitcoin Spot ETFs. Meanwhile, Hong Kong is increasingly opening up so that the Chinese are not left out, and a framework for crypto-regulation has been adopted in the EU with MiCA. According to most experts and analysts, a sweet spot for investors with foresight.

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