The Evergrande-led sell-off caused market players to panic as prices dropped significantly. Bitcoin and many other altcoins shed a substantial amount of gains, and have only just begun to correct losses.
However, pundits are still wary of the possibility of an extended bear market, as September is known to come with a lot of drawbacks for the Crypto market.
So far, investors have pointed to eight significant factors, four of which are poised to continue to hinder the continuation of the bull run, while the others are expected to send the market to unprecedented price levels.
The Ripple lawsuit will be a defining factor of the market’s long term destination
The SEC vs. Ripple case that has caused a buzz in the crypto industry has been dragging on since December 2020 when the suit was filed. With both parties refusing to back down, key players are speculating the suit could drag on for much longer.
The result of the suit — whether Ripple or the SEC wins— is certain to play into market sentiments. If the SEC wins the suit, it could hint that it has the upper hand in the decision-making process of crypto adoption in the United States, and the long-term result could be a pullback from institutions and investors. On the other hand, a win for Ripple is bound to ignite hope for the market and bring about positive market sentiments.
Regulatory clarity, institutional adoption, and ‘Ethereum merge’ are major bullish catalysts
One of the most discussed topics in the crypto scene is the level of regulation that the industry could record in the long term, especially from the U.S.
A definitive framework for crypto in the long term will boost investment interest. Similarly, a rise in institutional adoption stirs a lot of FOMO as the market has seen in the past, which is also likely to play into kickstarting the bull run.
The second phase of the Ethereum 2.0 upgrade, aka “the merge,” which will see the Ethereum network make the switch to the Beacon Chain as its consensus mechanism, remains another possible bullish trigger in the long term.
Possible long term bearish catalyst that could tank the market
On the other hand, bearish factors include the delay of a Bitcoin ETF. So far, there have been more than 12 Bitcoin ETF filings.
With the increase in filings comes market excitement. But failure to meet market expectations could trigger the bears. Any crackdown from the SEC through the implementation of strict exchange, and stablecoin policies could also potentially cause the bears to strike.
The longevity of the Evergrande crisis is also another bearish factor that could continue to weigh the market down.
Lastly, as investor Lark Davis wrote, another bearish agent is “FED tapering drags down stock markets, big money is in crypto now, and they are not afraid to sell for cash”.