Sign In with Google
Sign In with Facebook
The Rising Tide in the Crypto World
There's an unmistakable wave of excitement coursing through the crypto market today as Bitcoin sails past the $30,000 mark, and investors are buzzing about the rapid succession of new BTC ETF applications. Bitcoin, Ether, Cardano, and a host of altcoins have all seen an uptick after multiple influential institutions took a leaf out of BlackRock's book and filed for Bitcoin ETFs in the United States.
The Bitcoin price, for the first time since April 18, touched $30,000, concurrently posting a commendable 36% year-on-year rise since China's cautionary proclamation in June 2022 that BTC was teetering on the brink of oblivion.
This rally sparked a flurry of short liquidations across the market, summing up to over $173 million in a single day on June 21. This upswing in crypto prices is gradually closing the growth gap between equities and the cryptocurrency market, which expanded following the Federal Reserve's decision to pause interest rate increases.
Despite the robustness of today's rally, doubts about its duration persist due to expectations of more regulation from the United States Security and Exchange Commission. The lack of unanimous support on crypto regulation among U.S. legislators means significant legislation is unlikely to pass, potentially resulting in the SEC classifying many cryptocurrencies as securities.
Let's dissect three primary factors influencing the current strength of the crypto market.
The Bitcoin ETF Excitement
Rumors around the first Bitcoin ETF approval in the U.S. have given the crypto market price a much-needed boost. The buzz intensified when BlackRock, the world's top asset manager, filed a Bitcoin spot ETF with the SEC on June 16.
It's worth noting that BlackRock, an investment behemoth overseeing $9.5 trillion in assets, has submitted 576 ETF applications and faced rejection only once. Market analyst Lark Davis suggests that an SEC green light could lead to BlackRock snapping up all available Bitcoins across crypto exchanges.
However, the SEC hasn't shown favor to any Bitcoin ETF applications so far, including those from prominent asset managers like VanEck, Ark Invest, and Bitwise. WisdomTree, whose application for a spot Bitcoin ETF has been rejected twice by the SEC, is the latest to submit a new filing. This New York-based asset management fund supervises roughly $83 billion in assets. Notably, Invesco has recently reactivated its application for a Bitcoin ETF on the Cboe exchange.
The Growing Optimism in the Crypto Market
While risk events could still sway Bitcoin and altcoin prices, data from Coinglass reveals a shift in traders' positions, with 54.24% now long on Bitcoin, a 1.2 ratio compared to those who are short.
Coupled with dwindling spot volume and Bitcoin's net outflow from exchanges, this trend may lead to increased price volatility. Typically, an increased net outflow from exchanges reduces sell pressure, thus allowing short liquidations to have a more significant impact on Bitcoin's price.
The Impact of the Fed's Pause on Interest Rate Hikes
When Federal Reserve Chairman Jerome Powell announced at the June 14 Federal Open Market Committee (FOMC) meeting that interest rate hikes would be put on hold for June, it met investors' expectations. However, the crypto market's bullish response wasn't as instantaneous as that of equities.
Although Bitcoin and Ether prices have been affected by recent negative enforcement news, today's rally indicates a resurgence of bullish momentum. The Bitcoin Fear & Greed Index reaching a three-month high indicates a heightened willingness among investors to engage with riskier assets.
In conclusion, crypto markets are likely to continue experiencing price fluctuations due to macroeconomic events. While the positive news of BlackRock's ETF filing and the resurgence of institutional interest has given a temporary lift to crypto prices, the market's reaction to potential enforcement actions or economic downturns will ultimately decide its future trajectory.
