Bitcoin (BTC-USD) has dropped more than 20% from its all-time high of over $73,000 seen in March. However, several potential bullish catalysts could push the digital asset higher, according to a Binance executive.
On this week’s episode of Yahoo Finance Future Focus, Binance head of regional markets Vishal Sacheendran discussed the factors that could benefit bitcoin and other cryptocurrencies.
He highlighted the current macroeconomic environment, which is poised for a possible US Federal Reserve rate-cutting cycle, as well as the anticipation surrounding the upcoming US presidential election in November.
With pro-crypto candidates like Donald Trump and Robert F Kennedy Jr in the race, and Kamala Harris signalling she may show more support for the sector than the current administration, the future of the cryptocurrency sector could see some developments.
The crypto market anticipates a Fed rate cut
“Everyone’s expecting the Fed rate cuts to happen in September, which is a catalyst that could trigger a cryptocurrency market rebound,” Sachenndran said.
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He added that there’s more synchronicity between the traditional financial markets and the cryptocurrency market than there was in the past. “You now have a landscape of institutional investors coming into the crypto market as well, you have the bitcoin and ethereum (ETH-USD) spot exchange-traded funds,” he said.
The CME FedWatch tool shows a 60.5% likelihood of a 25 basis point cut in September and a 39.5% chance of a 50 basis point cut.
Fed Funds CME futures are also implying a 13% chance that the central bank will have slashed rates by 75 basis points in total between now and its November meeting, which will take place two days after the US presidential election.
A lower interest rate environment could make traditional financial assets like bonds and savings accounts less attractive, potentially driving investors to seek higher returns in risk assets like stocks and bitcoin.
Binance’s preparations for potential economic downturns
Market observers have recently identified a range of recessionary signals looming over global markets.
One of the key indicators, which caused market turbulence in early August, was US jobs data showing a rise in the unemployment rate to 4.3% in July, along with a slowdown in hiring.
According to US Global Investors CEO Frank Holmes, the unemployment reading triggered the Sahm Rule, an indicator that has accurately predicted nearly every US recession since the 1950s when applied to historical data.
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However, Sacheendran emphasised that Binance is well-prepared for a potential global recession. “Binance is a seven-year-old company, and we’ve experienced extended periods of volatility, and our business model has proven quite resilient to date. And as crypto use cases continue to develop, you’ll see greater adoption than before and we expect to see greater demand for crypto exchanges, even higher than it was before,” he said.
“Education is extremely important, and our Binance Academy teams have been working closely with universities across different regions, and training law enforcement agencies to catch bad actors,” he added.
Wider implications of the EU’s MiCA regulatory framework
Sacheendran pointed to the EU’s Markets in Crypto Assets (MiCA) regulation, which will be fully enforced by December, as a welcome development for the cryptocurrency sector.
“The EU’s MiCA framework is one regulation that oversees an entire region, which is which is phenomenal and it’s amazing that regulation of the cryptocurrency sector has reached this point,” he said.
“We’re exploring the best options for ensuring that we are able to continue to offer products and services in the EU and have been making the neccessary structural changes to our corporate governance.”
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Sacheendran said that regulation should help to drive innovation and have the users of financial platforms and products as its focus.
“Regulators shouldn’t be as prescriptive when it comes to things like stablecoin issues or finding which business model a company should be using to set up shop in the EU,” he added.
It is important for regulators to continue having conversations with the players who serve these markets and see what works best and how to manage risks, he said.
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