The latest report from asset manager and crypto exchange-traded fund (ETF) producer VanEck, led by Matthew Sigel and Nathan Frankovitz, examines Bitcoin’s fundamentals, adoption trends, and volatility arising from the Federal Reserve’s interest rate cuts and and the upcoming US. presidential election.
Shift In Bitcoin Adoption
I report highlights that the price of Bitcoin has increased by 124% in the past year, outperforming all major asset classes. Within the cryptocurrency sector, Bitcoin’s dominance—measured by its market capitalization compared to the total crypto market—increased 15% year-over-year, reaching 56%.
Despite the company’s strong price performance, it notes that the forces driving Bitcoin adoption have changed. By 2023, Bitcoin is up 155%, reportedly fueled by “documentation,” which allows users to store media files blockchain and attract retail funds and trading costs.
However, the company finds that this trend has slowed down, resulting in a 93% drop in daily sales. As a result, the decline in on-chain activity has led to a decrease in daily active addresses and transaction costs, suggesting that Bitcoin’s current price appreciation is driven more by its role as a store of value rather than retail transactions.
This change suggests that institutional players are increasingly using Bitcoin to store and transfer value. Along with this trend, related to Bitcoin assignments we saw an 87% increase in market capitalization, which shows the growing acceptance of Bitcoin as an investment method.
Fed Rate Cuts And Harris-Trump Divorce Approaches
Looking ahead, VanEck asserts that the interaction between the Federal Reserve’s monetary policy and the political environment will have a major impact on BTC and the broader. digital asset market.
Suppose the Fed continues to lower interest rates in response to economic challenges. If so, the company expects that this could create an ideal environment for risky assets like BTC, attracting investors looking for higher yields.
What is to come US presidential election and presents a complex picture of Bitcoin’s future. Both potential administrations, under current Vice President Kamala Harris or former President Donald Trump, are expected to maintain or accelerate spending, which could lead to further cuts.
This monetary policy, aimed at stimulating the economy, may indirectly create a favorable environment for risky assets like Bitcoin. However, the impact can lower investor confidence if or when management adopts anti-business policies.
You should Kamala Harris keep Gary Gensler as Chairman of the Securities and Exchange Commission (SEC), or closely follow Elizabeth Warren’s wing of the Democratic Party, the asset manager predicts that the sector of digital goods may face a tightening regulatory framework.
Despite these potential challenges, the asset manager says the Harris president could benefit from Bitcoin in the long run. Thinking that a more regulated environment could bring greater transparency and legitimacy to the cryptocurrency space.
On the contrary, ability Donald Trump the president will likely favor a more deregulated environment, which the company believes would benefit the entire crypto ecosystem.
It doesn’t matter who wins the presidency, the company says it’s a “major trend” of growth. budget deficits and rising nationalism the debt will likely continue. Such conditions often weaken the US dollar, creating a macroeconomic environment where BTC has historically thrived.
At the time of writing, BTC is trading at $62,700, down about 3% in a 24-hour period.
Featured image from DALL-E, chart from TradingView.com