After a roller-coaster 18 months, bitcoin—not necessarily the entire U.S. cryptocurrency market—may be on the cusp of a bullish run in the second half of 2023, according to analysts from Adamant Research and Standard Chartered bank. The key driver could be greater adoption by traditional financial firms.

Traditional Financial Firms May Boost Bitcoin Prices

A string of crypto-related bankruptcies starting mid-last year and peaking with the collapse of FTX in November, had many investors losing faith in crypto markets. However, bitcoin prices recently got a second wind as a number of companies, including Blackrock (BLK), Fidelity Investments, Invesco (IVZ) and Wisdomtree (WT) doubled down on their applications for spot bitcoin exchange traded funds (ETFs.)

Worst May Be Over For Bitcoin Prices, Say Analysts

Adamant Research indicates that an accumulation phase for bitcoin will continue in the $22,000 to $42,000 range before the crypto asset eventually hits a new all-time high north of $120,000 as a result of a multi-year bull run.

Adamant Research was one of the first firms to put out a report on bitcoin more than 10 years ago in November 2012. Each subsequent report released by the firm in 2012, 2015, and 2019 came at a time when bitcoin and the greater crypto markets were at historically undervalued levels, and they released their latest report in April 2023. While potential downside risks, such as regulatory crackdowns and liquidations by large holders, are also discussed, the report points to continued high levels of inflation and a troubled bond market as two of the factors that will contribute to the coming bitcoin bull market. Additionally, the report claims investors would be better off sticking with bitcoin rather than holding a diverse set of crypto assets.

An April 2023 note from Standard Chartered Bank also predicted that the prolonged crypto winter has come to an end, and bitcoin may surge to $100,000 by the end of 2024, Reuters reported. The note suggested that several factors, including the solvency crisis in the banking sector, have restored bitcoin's reputation as a decentralized, scarce digital asset.

Standard Chartered analysts expect the bitcoin price to continue climbing as the broader macro backdrop for risky assets improves, particularly as the Federal Reserve moves away from its policy of tightening. Additionally, bitcoin's upcoming halving event in 2024, when the reward for miners will be halved, is anticipated to further bolster its value.

Watch Out For Regulatory Developments

Over the past few months, the U.S. Securities and Exchange Commission (SEC) has cracked down on a number of cryptocurrency firms such as Binance, Coinbase (COIN) and Kraken. One of the regulator's main contentions is that it considers non-bitcoin crypto assets as securities and has taken action against crypto platforms for the sale of unregistered securities.

Any developments in legal battles such as the Ripple Labs v. SEC case to determine whether the XRP token is a security or the SEC v. Coinbase case on whether staking as a service construes as a sale of unregistered securities could have broader implications for the crypto markets.

What Would a U.S. Recession Mean for Crypto?

A possible U.S. recession could impact crypto asset prices and demand for high-risk assets, but it could also be bullish for crypto in a situation where the recession is caused by poor government policy while crypto is viewed as a decentralized, digital safe haven, according to a May report from S&P Global.

Additionally, the report covers the potential utility of crypto in countries dealing with heavily depreciating currencies. However, S&P analysts say there is no conclusive data available on whether crypto an act as a useful inflation hedge.