The bull run has officially begun!
Hello and welcome to another blog post on the crypto currency market. The recent market conditions suggest that I was correct about the market before it pumped, you can check my previous articles from here:
In this post, we will discuss the main events and news that have sparked the bull run in the past week, and what they mean for the future of crypto.
The FOMC meeting and Fed pausing rate hikes
One of the most important events that happened last week was the Federal Open Market Committee (FOMC) meeting, where the US central bank decided to hold interest rates steady at 5%-5.25%, putting a pause on its 10 consecutive increases in 15 months.
This was a surprise to many analysts and investors, who expected the Fed to raise rates at least once more this year, in response to the rising inflation and economic recovery.
The Fed’s decision to pause rate hikes has several implications for the crypto market. It means that the Fed is acknowledging the uncertainty and risks in the global economy, such as the COVID-19 variants, trade tensions, geopolitical conflicts, and environmental issues, which could increase the demand for safe-haven assets like Bitcoin.
The Fed also projected two more rate hikes by the end of 2023, which could signal that it is still confident in its long-term outlook and policy framework. However, these projections are based on assumptions and forecasts that could change over time, depending on how the economic data and conditions evolve. Therefore, the Fed’s stance could remain flexible and data-dependent, leaving room for more surprises and adjustments in the future.
The BlackRock spot Bitcoin ETF application
Another major event that happened last week was the application of BlackRock, the world’s largest asset manager, for a spot Bitcoin ETF. This would be a groundbreaking product that would allow investors to buy and sell shares that represent actual bitcoins held in custody by Coinbase, the largest US crypto exchange.
If approved by the SEC, this would be the first product of its kind in the US, and could open the doors for more institutional and retail investors to access Bitcoin in a regulated and convenient way.
The BlackRock spot Bitcoin ETF application is a bold move that challenges the SEC’s previous rejections of similar proposals. The SEC has been reluctant to approve spot Bitcoin ETFs, citing concerns about market manipulation, investor protection, liquidity, custody, valuation, and surveillance in the underlying spot Bitcoin market. The SEC has argued that these issues are not adequately addressed by existing regulations and frameworks, and that it needs more time and information to evaluate them.
However, BlackRock’s application could have some advantages over previous ones.
- First, BlackRock is a reputable and influential player in the financial industry, with $9.1 trillion of assets under management. It has a strong relationship with regulators and policymakers, and could leverage its expertise and resources to address their concerns and expectations.
- Second, BlackRock has chosen Coinbase as its custodian and pricing provider for its ETF. Coinbase is a regulated and licensed crypto exchange that has recently gone public on Nasdaq. It has a proven track record of security, compliance, transparency, and innovation in the crypto space. It could offer a high level of trust and credibility for both BlackRock and the SEC.
- Third, BlackRock has based its ETF on the CF CME Bitcoin Reference Rate (BRR), which aggregates the notional value of Bitcoin trading across major Bitcoin spot exchanges. This could provide a reliable and consistent pricing source for its ETF, as well as mitigate some of the risks of market manipulation and fragmentation.
The approval of BlackRock’s spot Bitcoin ETF would be a huge milestone for the crypto industry, as it would demonstrate that spot Bitcoin is mature enough to meet the regulatory standards and investor expectations in the US.
It would also create a positive feedback loop for Bitcoin adoption, as more investors would gain exposure to Bitcoin through a familiar and accessible vehicle, which would increase the demand and value of Bitcoin, which would attract more investors and innovation to the crypto space.
The other big players applying for Bitcoin ETFs
BlackRock is not the only one trying to launch a spot Bitcoin ETF in the US. WisdomTree, another asset manager with $75 billion under management, also filed an application with the SEC on June 21, 2023.
In addition, several other firms have filed applications for Bitcoin futures ETFs, including VanEck, Valkyrie, ProShares, Invesco, and Galaxy Digital. These applications show that there is a strong demand and interest from institutional players to offer Bitcoin exposure to their clients and investors.
The SEC has already approved several Bitcoin futures ETFs, such as the ProShares Bitcoin Strategy ETF (BITO) and the Valkyrie Bitcoin Strategy ETF (BTF), which have seen a high level of trading volume and inflows since their launch.
However, many investors still prefer spot Bitcoin ETFs, as they offer a more direct and transparent exposure to Bitcoin, without the complexities and costs of futures contracts. Therefore, the SEC’s approval of spot Bitcoin ETFs could boost the crypto market even further, as it would cater to a wider and deeper pool of investors.
The Jerome Powell’s positive remarks on stable coins
In his latest testimony to the House Financial Services Committee, Federal Reserve Chair Jerome Powell discussed a range of topics around crypto assets and regulation. He called stablecoins “a form of money” and urged that there was a need for central bank oversight in order to create stablecoin regulation.
Powell’s latest remarks on the stablecoin draft bill underline his position on the crypto asset class, which runs in contrast to that of SEC chair Gary Gensler.
You can check the full video of the FED meeting below.
What's Next?
What’s next for Bitcoin? The cryptocurrency has surged by nearly 24% in the last week and is now trading around $30k. Will it rise to $35k or drop to $25k again? Let’s look at the charts.
Bitcoin has rebounded from the strong support line near $25k and is now in a big resistance zone. A break above $31k could push it to $32.5k, followed by a correction. But that seems unlikely given the already huge rally.
The RSI is also very high and showing signs of a reversal. A more realistic scenario is that Bitcoin consolidates in this resistance zone between $28k-31k for a while before breaking out to the upside. The bearish case will happen if Bitcoin falls below $28k, which could be our last chance to buy BTC at these low prices ever. What do you think?
We should also be aware that the crypto market is still volatile and unpredictable, and that there are still many challenges and uncertainties ahead. Therefore, we should always do our own research, diversify our portfolio, manage our risk, and stay informed of the latest developments in the crypto industry.
Thank you for reading this blog post. We hope you found it informative and useful. If you have any questions or feedback, please leave them in the comments section below. And if you liked this post, please share it with your friends and followers on social media. Until next time, happy investing!
