Bored Bitcoin Seeks Direction After Big Bang – By Reuters

By Medha Singh and Lisa Pauline Mattackal

The cryptocurrency market has exhibited a marked lack of momentum over the past three months, following a strong start to the year.

Bitcoin has primarily fluctuated between $56,000 and $63,000 in the latter half of the year, a stark contrast to the first six months when it surged 45%, driven by the launch of U.S. exchange-traded funds (ETFs) tracking its spot price.

Market participants are now looking for potential new catalysts in the cryptocurrency sector as we approach the end of the year and the beginning of 2025, in addition to broader trends such as changes in U.S. interest rates and the upcoming presidential election.

Trader Jake Ostrovskis from the UK-based crypto firm Wintermute is optimistic about the upcoming launch of options related to BlackRock’s spot bitcoin ETF. He believes that this new financial instrument could attract increased retail investment in the U.S. following its recent approval by regulatory authorities.

However, as regulators classify bitcoin as a commodity, these options may also require approval from the agency responsible for overseeing commodity derivatives, according to Youwei Yang, chief economist at BIT Mining. "If successful, these ETF options could enhance bitcoin’s market complexity and volatility, potentially leading to greater participation from both institutional and retail investors," Yang added.

The crypto market has had an impressive performance, with the anticipation and approval of U.S. ETFs significantly boosting bitcoin activity worldwide. The total market value of cryptocurrencies has soared to $2.2 trillion as of October 1, 2023, up from just $8.3 billion at the beginning of the year.

"We’ve seen a notable increase in institutional onboarding and trading activity this year," Ostrovskis noted, highlighting a growing demand for digital asset platforms that mirror conventional financial services.

Despite bitcoin’s notorious fluctuations, its 90-day volatility has decreased to 42% this year, down from 67% in mid-2020, as reported by Deutsche Bank. Market analysts caution that bitcoin remains closely linked to other cryptocurrencies and may be one of the first assets sold off by investors in times of uncertainty; for instance, bitcoin dipped 5% following an escalation in tensions in the Middle East last week.

Top Countries for Crypto Adoption

According to Chainalysis’ Global Adoption Index, which evaluates cryptocurrency usage in 151 nations based on trading and payment metrics, crypto adoption has outpaced the 2021 bull market between late 2023 and early 2024.

Adoption is particularly robust in lower-income countries, where citizens often face limitations with traditional financial systems. India ranked first in Chainalysis’ index, followed by Nigeria. Notably, seven of the other top 20 countries were emerging Asian markets, including Indonesia, Vietnam, and the Philippines.

Proponents of cryptocurrency often reference its utility in nations experiencing high inflation and rapid currency depreciation, such as Turkey and Argentina, to demonstrate its practical applications. The report from Chainalysis also highlighted a significant rise in decentralized finance (DeFi) and stablecoin activity in regions such as Sub-Saharan Africa, Latin America, and Eastern Europe.

"The value proposition for bitcoin and stablecoins in Latin America remains strong," stated Mauricio Di Bartolomeo, co-founder of a crypto lending platform. "Many in the emerging world prefer to transact in dollars, yet often lack trust in their banking systems."

The United States secured the fourth position in the overall adoption ranking, with South Korea and China taking the 19th and 20th spots, respectively. In terms of transaction volumes, the U.S. remains the largest market for cryptocurrencies, followed by India, as highlighted by Deutsche Bank.