Bitcoin woes have started to pile up after a massive beatdown in stocks over the week. Nevertheless, analysts remain optimistic that several factors could lead to a comeback of the crypto asset in the near future.
Most low-performing assets such as the Nasdaq Composite COMP (+1.41%) have seen a 4% decrease this month due to inflation anxieties. It was even worse for crypto, as assets like bitcoin BTCUSD (-4.45%) suffered a savage 20% drop.
The bad news does not seem to over for bitcoin, as it experienced an overall 30% drop from a $64,289 high in April, courtesy of Tesla CEO Elon Musk’s tweet that the electric car manufacturer will stop accepting bitcoin payments due to the cryptocurrency’s carbon footprint.
In its most brutal beatdown yet, the entire cryptocurrency asset space had half of a trillion dollars decimated.
Former top Goldman Sachs hedge-fund manager Raoul Pal remains bullish, however. Pal said that ‘the faithful need to hang in there’ and that things will start looking up, thanks to a ‘rocket fuel’ catalyst believed to spur more growth for cryptocurrency.
Pal, co-founder of Crypto TV and currently CEO of Global Macro Investor, believes that things will look for bitcoin in the next 12 months. He projected that BTC would go “above $250,000” and ETH (ethereum) above $20,000.
ETH (ETHUSD, -6.42%), the second most preferred cryptocurrency, has also suffered a 20% dip from its record-breaking high of $4,832 last week.
Investors would do well to remember that corrections are a fact of life in cryptocurrencies, advised Pal. In fact, people who really understand bitcoin and its volatility know that “35% pullbacks are normal,” he added.
Instead of focusing on the recent underperformance, Pal explained that bitcoin still registers the highest returns on all asset classes at 200% annualized returns. In addition, it is still the highest adopted asset and likely to go up given the rapid digitalization.
‘Rocket fuel’ to catalyze bitcoin growth
Analysts have offered several reasons why believers should remain patient with bitcoin. Pal identifies the arrival of a US exchange-traded fund (ETF) come September, which he considers ‘rocket fuel’ for the digital assets industry.
Like other crypto experts, Pal believes bitcoin is poised for a bull run but will need a catalyst to trigger it. An ETF will lure more investors and inspire more mainstream acceptance of the crypto asset, he added.
Despite the Musk-induced crash and still-futile attempts at a Bitcoin ETF, Pal believes an ETF is likely to be approved, especially with the successive support from large banks such as Goldman Sachs and JPMorgan.
With this new fund, investors can access cryptocurrencies without going through a tedious process, such as creating a new account or wallet on an unfamiliar platform.
Pal also considers the successful launch of ETFs in Canada as a sign of what is to come.
Meanwhile, Galaxy Digital’s Mike Novogratz also praises ETF, calling it the ‘next catalyst.’