Crypto growth requires a strong push and shove. The point is that there is nothing on the horizon for crypto that could push up prices substantially. The Fed does not count, since the regulator’s rate action is priced in and changes in it will likely be minimal. So, what then could cause crypto to “go parabolic"?
The current environment in the cryptocurrency market requires major drivers for significant growth. Here is a list of factors that could potentially lead the way to a parabolic growth scenario:
1. If large financial institutions, investment funds or corporations start to actively invest in cryptocurrencies or use them in their operations, this could trigger strong inflows.
2. Clear-cut rules and regulations for cryptocurrencies in major economies across the globe could help mitigate uncertainty and attract more investors.
3. Significant improvements in the scalability, security or functionality of blockchain technologies could increase their attractiveness and applicability.
4. Economic instability or crises in traditional financial systems may increase the appeal of cryptocurrencies as an alternative asset. But there is a double whammy here to keep in mind. Cryptocurrency is a risk-sensitive asset, so the reaction to crises may be the opposite.
5. Widespread adoption of cryptocurrencies as a means of payment by large retailers or payment systems could stimulate demand.
6. The development of new blockchain-based apps that are attractive to mass users (e.g. related to DeFi or NFT) might draw in new users.
7. Although the Fed's policy moves have already been largely price in by the market, unexpected changes in the monetary policy of key central banks could still exert an impact on the crypto market.
8. Technical factors and low liquidity in the market may come into play. While the crypto market is known for its low liquidity, parabolic growth could once again be seen after the halving event.