We’ve recently experienced a surge in BTC, with many people pointing to the recent wave of institutional activity as the saviour.
BlackRock’s Bitcoin ETF filing
The launch of the new institutionally backed crypto exchange EDX
Let’s consider both in more detail…
Did BlackRock Pump Bitcoin?
BlackRock, the world’s large asset manager, filed for a spot Bitcoin ETF, with Coinbase serving as its crypto custodian. What’s the significance of this?
Greater regulatory clarity on crypto assets from the SEC (something that’s also being worked on at the moment with the Binance vs SEC case). Recall that previous efforts from Grayscale Investments to launch spot Bitcoin ETFs have been blocked. BlackRock is likely to be better connected with the SEC, giving them an edge.
A surge in institutional interest in crypto (remember, the ETF investment vehicle makes it easier for investors to get exposure to crypto by reducing the barrier to entry. This surge in activity could create greater liquidity and stabilization of prices)
This a significant step in legitimising cryptocurrencies in traditional finance (whilst many in TradFi might not trust crypto, they certainly trust BlackRock)
The launch of the new institutionally backed crypto exchange EDX has many people suspicious. Wall Street giants Fidelity Digital Assets, Charles Schwab and Citadel Securities are responsible for the exchange that plans to offer BTC, ETH and other major digital assets. Why the suspicion?
The timing is odd. Recently, the SEC has really cracked down on crypto exchanges. The SEC has put pressure on Binance and Coinbase, even calling for a full asset freeze in BinanceUS. The timing and urgency of the SEC actions have people wondering if this crackdown was to pave the way for this new institutional exchange.
Incumbency bias. It will be curious to compare the SEC treatment with these institutions versus other crypto exchanges and whether they will receive favouritism for being established traditional institutions.
Whilst many people are discussing the narrative of this ETF news creating a new bull run, the crypto markets have matured to a point where it is difficult for a single event (either bullish or bearish) to flip the market completely. There is the exception of Black Swan events like the coronavirus pandemic but nowadays, in general, a single headline is unlikely to trigger a complete change in our markets. We need to look for confluence and multiple macro and technical factors.
All the best,
Kim