Over the past month, Bitcoin maintained its price range between $29k and $41k, seemingly stabilizing after its massive correction in May 2021, when it dropped to $30k from $60k within a week. It seems to be undergoing a re-accumulation phase, with the strong support at $30k reflecting the level where institutions and long-term HODLers (i.e., strong hands) have been acquiring the digital asset, as suggested by on-chain metrics. Much of the losses in the recent period have been suffered by recent entrants into the market, who tend to operate and transact on mainstream market sentiment. They have borne the brunt of liquidations in the market, having also panic sold during the price capitulation in May 2021.
Fundamentally, Bitcoin adoption has continued to increase. On June 9, 2021, it was officially declared as legal tender in El Salvador by President Nayib Bukele. The impact on daily life in El Salvador has already been evident, with citizens already utilizing the digital asset as a store of value and medium of exchange to buy groceries and pay utility bills. There are high hopes for Bitcoin’s use in a country where 70% of its people do not have access to bank accounts. The pro-Bitcoin sentiment has also spread across Latin America, with countries such as Brazil, Argentina, Paraguay, Mexico and Panama all expressing support for further adoption, legalization and promotion of the asset.
On the other hand, Bitcoin has also experienced fierce hostility on the global stage. Whether it is through China’s ban on domestic BTC mining operations as well as its prevention of financial institutions from providing crypto-related payment services, or the FUD caused by Elon Musk’s market-impacting tweets and questionable statements regarding Bitcoin’s energy consumption, it can be asserted that significant tension and instability has gripped the crypto currency market in the recent period. Yet, despite all the setbacks and opposition faced by Bitcoin, it has shown admirable strength to remain in the $30k+ price region. This has fuelled optimism among some observers that another potential bull run could take place after the current consolidation period. We could be entering what promises to be a very interesting and potentially unprecedented time in the cryptocurrency market.
(Note: The above thought piece covers the wider VA industry, and may not be an activity that Arabian Bourse Limited (ABX) is looking to be licensed to undertake.
ABX has received in-principle approval from Financial Services Regulatory Authority of Abu Dhabi Global Market (ADGM) and is currently in the process of obtaining an FSP. ABX aims to be the first of its kind fully regulated, virtual asset MTF and custodian in the region focused on institutional and retail investors.)