The potential introduction of Bitcoin into regulated markets – and more secure than exchange platforms – has brought renewed excitement to a sector more accustomed to shocks. The price of the world’s leading digital currency by trading volume has risen sharply this week. The peak was reached with an increase of almost 15% between Monday and Tuesday, reaching $35,198 (about 32,600 euros at the exchange rate), the highest price since May 2022 and half its value. At its peak it was almost $70,000. The stock market rally began after the announcement of possible regulatory approval in the United States that would allow users to invest in Bitcoin Cash funds on secondary exchanges and not just platforms like Binance or Kraken.
In particular, the value of the cryptocurrency began to rise when its fund listed with BlackRock – the largest asset manager in the world – appeared on the list of the trading platform DTCC, which is responsible for regulating these products in the US market. Eric Balchunas, an analyst at Bloomberg Intelligence, who The potential approval was driven by the X platformHe was also responsible for explaining after the fact that this appearance “does not mean it has been technically approved, but ticks virtually all the boxes required to launch an ETF.” [siglas en inglés de Exchange Traded Fund, o fondo cotizado] because the tickers are usually announced shortly before the start.”
On paper, this would result in the Bitcoin market being flooded with liquidity, receiving billions of new dollars and thereby increasing trading volume while driving up its price.
Spot ETFs are mutual funds that track the movement of a stock index, meaning they fluctuate with and track the price of – in this case – the cryptocurrency. When the Bitcoin price rises or falls in the market, the exchange-traded fund does the same. The purchase is similar to buying shares on the New York Stock Exchange.
Currently, Bitcoin is only traded in futures ETFs, a type of contract that commits investors to deliver a specific price at a future date. A transaction that is more common in commodity markets such as gas and oil and is speculative in nature as contracts are negotiated with prices for the coming months. Currently, cryptocurrency exchanges mainly take place on instant trading platforms such as Binance, Kraken or FTX, which are involved in a major fraud lawsuit.
Miguel Caballero, CEO of Tutellus, a virtual cryptocurrency school, defends that exchange-traded funds and exchange platforms are products that can coexist over time. “Those who invest with BlackRock plan to hold their investments for the long term, while users of trading platforms seek immediate results,” says the expert. “It could be the equivalent of investing in an index like Nasdaq or buying a startup outright.” [compañía emergente]“, explains Ion Juaregui, director for Latin America at the stock exchange platform Activtrades.
Félix Fuertes, founder of the virtual school Formación en Inversión, explains that funds of this type usually do not bother to create an ETF if they do not have validation on the market and “this usually comes from investors who have seen it.” that “they miss the opportunity to commission this type of product.”
BlackRock filed in June to cash out its Bitcoin ETF, but immediately faced resistance from the SEC, the market regulator in the United States, which is ramping up its offensive against cryptocurrencies following the fall of the digital currency Terra and the discovery of irregularities had on platforms like Binance and FTX. In 2021, SEC Chairman Gary Gensler warned that the lack of regulation of the crypto asset market raised “concerns about the potential for fraud and manipulation.”
The top regulator believes that Bitcoin’s volatility may be too much for ordinary investors. The development of this digital asset has taken the form of a roller coaster ride since its release. In 2020, it grew by more than 300%; The increase weakened in 2021 (60%) and suffered a loss of 64% in 2022.
Caballero emphasizes that while the SEC has tried to delay the approval of the BlackRock ETF as much as possible, “the time has come when it no longer has the weapons to stop it any further, and the courts agree.” [a la firma privada]“. In August, Grayscale Investments, another major fund manager, won a court ruling allowing it to move forward with converting its Bitcoin trust into an ETF.
In recent months there have been several requests to bring Bitcoin into ongoing trading. “The final decision date for Ark Invest’s ETF application is January, all others in March. Given BlackRock’s weight in the market – with holdings in most sectors – it is possible that BlackRock will pressure the SEC to approve the ETF at the same time as Ark Invest to avoid falling behind and raise capital before entering the market “Be calm,” says Fuertes, who believes that Bitcoin’s adoption in more regulated markets seems inevitable, even if it takes longer than necessary.
The increase in the price of the main virtual currency, which fell to the $ 34,000 mark this Friday, also increased – as usual – the value of other popular cryptocurrencies. Etherium, the second largest token on the market, managed to climb above $1,700 per unit on Monday (about €1,610 at the current exchange rate), and Solana climbed to its best moment of the year, reaching $34 (€31). ). In both cases, they are still miles away from their best days, when they were listed at $3,910 and $225 respectively, according to CoinMarketCap.
The end of the “crypto winter”
Investors remain alert to the next bullish catalyst for the virtual currency created by Satoshi Nakamoto, namely the reduction in the production rate of Bitcoins by half planned for April 2024 – the so-called halving Theoretically, it underpins its value.
However, Mirva Anttila, director of WisdomTree, a New York-based asset manager, estimates that “at least 19.7 million Bitcoins have already been minted, out of a total of 21, it probably won’t have that big of an impact at this point.” Rather, it will noted that “as central banks’ liquidity improves and they begin to stimulate the economy by cutting interest rates, a favorable environment could be created for crypto assets to take full advantage of other bullish catalysts.” All experts interviewed agree that if the SEC decision is combined with the halving date, there could be a significant imbalance between supply and demand and a significant appreciation of this virtual currency.
So when does what investors have called the crypto winter end? Fuertes points out that the hurdle to overcome is $42,000 (almost €40,000) because “it is just an area of great accumulation that occurred during the last major price increase in 2021, when “Many people bought Bitcoin, so this is your last loss zone.” “Still,” he adds, “institutional traders usually respond with liquidation to put pressure on buyers, so the price could fall as well.”
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