In all of my years in this business, I’ve learned that you can’t paper over the truth. And the truth is that cryptocurrencies are in a bear market right now. No doubt about it.

The industry is still recovering from recent scandals and is slugging it out with the SEC over how it should be regulated.

But… Hope springs eternal. A few recent legal victories should serve as a wake-up call to regulators that crypto is here to stay and that the two sides need to work together. Even some members of Congress are getting up to speed on crypto.

At the end of the day, the best thing for investors is that we get some clarity.

So, with that in mind, I want to talk about three reasons you should get excited about cryptocurrency in the long run.

1. A “killer app” for crypto is getting closer.

It’s worth remembering that this cryptocurrency is still very new.

The earliest instance of fiat currency can be traced back to Yuan China under Kublai Khan in the 13th century. The precursor to the modern credit card were “charge plates” and “courtesy cards,” used in the 1920s and 1930s by some U.S. department stores.

Anything new and revolutionary on this scale (upending the global monetary system) will have ups and downs. It’s going to have its bad actors, too. Plus, these things take time to grow and mature before most people fully understand how revolutionary they will be.

But the “killer app” for crypto may be here soon.

“Killer app” is a term coined to refer to a piece of software (or an application) so compelling that people will buy the particular hardware or system primarily just to run that application.

And I think I have a pretty good idea of what it will be.

Visa (NYSE: V) is no stranger to crypto, as you can imagine. The payments giant has successfully tested a new system that simplifies the payment of fees required for every transaction on the Ethereum blockchain (aka “gas fees”).

Visa is also ramping up its use of stablecoins. A stablecoin’s value is pegged to a stable asset, in this case, the U.S. dollar. They allow quick and efficient cross-border transactions without traditional banking or currency conversions.

Now, you might think crypto poses a threat to Visa. So why are they doing this?

In reality, the legacy payment rails are threatened. Here’s what I mean…

Think about whenever you buy something or transfer funds. Have you ever thought about how much it just… sucks?

Credit and debit cards take 1-3 days to settle. ACH transfers (between banks) can take 1-3 days. And checks (remember those?) can take up to a week. Now, let’s contrast this with Ethereum. Under normal conditions, a payment on the Ethereum network can settle in about 13 seconds. Not posted to your account, mind you. Settled.

There’s your “killer app” for crypto. Secure, instantaneous transfer of money.

If somebody can figure this out and iron out all the kinks, then the legacy payment methods I mentioned will be Stone Age stuff.

It’s worth noting the language I used to describe Visa. Visa is not a credit card company. It’s a payments company. There’s a subtle difference there. If Visa, for their part, can help developers overcome some of the roadblocks of enabling seamless crypto transactions with merchants, they’ll be in the catbird seat. They’ll figure out how to get their cut, one way or another.

2. A Bitcoin ETF is a matter of “when,” not “if”…

Grayscale’s recent win against the SEC might pave the way for a much-anticipated spot Bitcoin ETF.

If you’re out of the loop, here’s what happened…

For years, Grayscale’s Bitcoin Trust (GBTC) was the only game in town for investors wanting exposure to Bitcoin without the hassle of buying and storing the actual cryptocurrency.

Instead of owning the actual cryptocurrency, investors own shares of the trust, which holds a significant amount of Bitcoin (similar to a physical gold trust). The value of the trust’s shares is (largely) tied to the current market price of Bitcoin. But it’s worth noting that GBTC often trades at a premium to the actual price of Bitcoin.

But Grayscale had bigger dreams. They wanted to convert GBTC into a spot-price ETF, which would essentially trade on traditional stock exchanges, with the Bitcoin held by a brokerage.

A spot Bitcoin ETF could be a game-changer, opening the floodgates for mainstream institutional adoption.

Now, the SEC has consistently denied these applications. So Greyscale sued.

The SEC’s objections have mainly revolved around concerns about market manipulation and lack of oversight. But this time, the court wasn’t having any of it. They found the SEC’s reasoning inconsistent, and now, the SEC is scrambling.

The bottom line is that it’s looking like the SEC eventually won’t have a leg to stand on. In a chat with TechCrunch, Grayscale’s legal head was all smiles, stating that a Bitcoin spot ETF approval is now more a question of “when” rather than “if.”

3. The “halving” is right around the corner…

Mark your calendars for April 2024. That’s when the “halving” happens for Bitcoin.

As you may know, Bitcoin mining involves receiving a reward (in the form of BTC) for validating new transactions on the blockchain. Those rewards cut in half every four years.

Now, keep in mind there will only ever be 21 million Bitcoins. As of now, about 19 million have been mined. This scarcity is part of what gives Bitcoin its value.

This “halving” effectively reduces the rate at which new Bitcoins are created and released into circulation. Historically, these halving events have led to significant price surges due to the reduced supply of new coins.

Pantera Capital, a leading blockchain investment firm, analyzed this based on previous “halvings.”

Here’s the juicy part:

“The next halving is expected to occur on April 20, 2024. Since most bitcoins are now in circulation, each halving will be almost exactly half as big a reduction in new supply. If history were to repeat itself, the next halving would see bitcoin rising to $35k before the halving and $148k after.”

In short, they think Bitcoin could rise to $35,000 leading up to the halving. That would be a 40% rally. Then, they’re calling for $148,000 by July 2025.

Closing Thoughts

Time will tell whether Pantera’s prediction is right, of course. And for that matter, the same goes for the other two factors mentioned above.

But there are plenty of other reasons to be bullish over the long run. And as more news comes out related to things like regulation and a Bitcoin ETF, I expect bullish sentiment to return later this year and into next year.

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