3 Catalysts Pushing the Crypto Market Higher

Monday was a milestone day for cryptocurrencies.

Bitcoin hit a new all-time high and is showing no sign of slowing down.

More gains are on the way — and not just for bitcoin.

Having followed the last crypto boom closely, I see that this rally is different.

That’s because the cryptocurrency market has three catalysts pushing it higher.

U.S. Federal Debt Is Growing — Fast

Due to the ongoing pandemic, the U.S. deficit as a percentage of gross domestic product (GDP) is at its greatest level ever.

The U.S. enacted fiscal stimulus as the economy came to a halt, adding to the nation’s debt.

U.S. Federal Deficit as a Percentage of GDP

More gains are on the way — and not just for bitcoin. Having followed the last crypto boom closely, I see that this rally is different.

(Source: Bloomberg.)

It is unclear how long the pandemic will last. But future stimulus is likely, which would add to the nation’s debt.

If the deficit grows too large, the government could engage in money printing in an effort to escape its massive debt burden.

If this scenario unfolds, the U.S. dollar would lose value and cryptocurrencies would soar.

Institutional Money Is Flooding Into Crypto

Coinbase, a large cryptocurrency exchange, has seen its institutional assets under custody increase 233% since April.

The company claims an “explosion of incoming capital” is occurring week after week.

Sweeping institutional adoption has helped drive the crypto market higher.

This demand has created a bull market that is much different than the 2017 crypto rally, which was fueled by retail investors with FOMO, or fear of missing out.

The Cryptocurrencies 100 Index

More gains are on the way — and not just for bitcoin. Having followed the last crypto boom closely, I see that this rally is different.

(Source: Bloomberg.)

5G Mobile Connectivity Is Rolling out Quickly

Cryptocurrencies typically rely on complex functions to process and verify transactions, which can limit their usability.

With the high speed and low latency of 5G, these transactions will be able to occur in real time. This will enable cryptocurrencies to be used seamlessly with real-world applications, adding to their value.

Cryptocurrencies will enable digital money transfer and other financial services for the unbanked population.

Underdeveloped parts of the world lack access to smartphones, and their people are unbanked. Globally, 55% of people do not have smartphones and 31% of people are unbanked.

Without banking services, people are limited in their ability to access lending or transfer money. As smartphone adoption grows, cryptocurrencies will fill the banking gap.