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What a difference just one week can make in the world of cryptocurrency markets! While a correction was still underway, looking for clear support just seven days ago, Bitcoin is now having its best week since March. The reasons for renewed optimism have been plentiful these past few days.
Indeed, financial giant BlackRock has reportedly filed an application with the SEC and NASDAQ to launch a spot Bitcoin ETF. This news follows previous rumors about BlackRock’s interest in cryptocurrencies. The proposed ETF would allow investors to gain exposure to Bitcoin without having to hold the cryptocurrency directly. If approved, this would mark a significant development for Bitcoin’s institutional adoption and pave the way for greater participation from traditional investors in the market.
The growing interest from large asset management companies like BlackRock signals a shift towards broader acceptance of digital assets by the traditional financial world. The potential for such a product is seen as a possible catalyst for a significant increase in institutional investments in the cryptocurrency sector. Institutional investors are attracted by the prospect of a regulated and secure product that would allow them to gain exposure to Bitcoin without having to directly hold the asset. This would also open the door to new capital flows and greater liquidity in the market. BlackRock’s reputation and size, as one of the world’s largest asset management companies, also lend greater credibility and legitimacy to Bitcoin as an investment asset.
WisdomTree and Invesco have followed in BlackRock’s footsteps by filing applications for physical Bitcoin ETFs. It seems that all of a sudden, several major players are looking to offer regulated products to meet the growing demand from institutional investors. Good news never comes alone? Rumors are circulating that Fidelity has filed an application for its own Bitcoin ETF. While this has not yet been officially confirmed, this move by Fidelity would align with the growing trend of major financial institutions exploring opportunities related to cryptocurrencies.
In this same vein of new solutions in the industry seeking to comply with strict regulatory frameworks, the digital asset platform EDX Markets has recently begun trading on the market and successfully closed a new round of fundraising. This marks a significant step forward for the platform, which aims to facilitate trade and management of digital assets. The new funding round will allow EDX Markets to enhance its operational capabilities, accelerate its expansion, and develop new products and services. The platform aims to provide advanced solutions for trading and managing digital assets, with a particular focus on regulatory compliance and security.
After the United States took a head-on approach to established players in the cryptocurrency market, it seems that the pillars of traditional finance see an opportunity to take over. It remains to be seen whether the SEC will view this trend favorably or if it really wants to bury the cryptocurrency market in the country.
The Grayscale Bitcoin Trust (GBTC) saw a bullish increase following BlackRock’s application. While the price of a GBTC unit was trading at a 44% discount to the actual price of Bitcoin a week ago, this threshold has dropped to 33%, a level not seen since September 2022. Grayscale, a subsidiary of the Digital Currency Group (DCG), has been filing a Bitcoin ETF application for years, like several other companies. The company first filed an application in 2016, before withdrawing it a year later. The application was renewed in 2021 but was rejected by regulators due to what authorities considered a “market prone to manipulation”. The repeated rejection of its ETF application led Grayscale to take legal action against the SEC last year. The case took a turn in March of this year when judges questioned the agency’s decision-making process. Although the long legal battle with the SEC seems endless, BlackRock’s flawless ETF application record (currently 575 acceptances against only one rejection) has brought a breath of fresh air to the GBTC.
All these factors have helped Bitcoin rise from its floor price of $25,000 to $29,000, the price at which the asset is trading at the time of writing. Bitcoin has regained over 50% of the cryptocurrency market dominance for the first time since May 2021. It had then lost this threshold following China’s announcement of a total ban on cryptocurrency mining, plus Tesla distancing itself from this asset due to environmental concerns.
Several US federal agencies have formed a new task force to combat crimes related to cryptocurrencies. This initiative is the result of collaboration between the Department of Justice, the Customs and Border Protection Service, and the Internal Revenue Service. The aim of this task force is to combat illicit activities such as money laundering, terrorist financing, and cryptocurrency-related fraud. The collaboration between federal agencies will allow for an exchange of information and resources to better understand and detect cryptocurrency-related crimes. This task force is likely to conduct targeted investigations, identifying and prosecuting criminal actors involved in illicit activities related to cryptocurrencies. This initiative demonstrates the increasing importance placed on the regulation of the industry.
Finally, many will say, Binance is preparing to integrate the Bitcoin Lightning network for deposits and withdrawals. This integration will allow Binance users to make faster and cheaper transactions using the Lightning network, which is a payment layer built on the main Bitcoin network. The integration of the Lightning network offers several benefits, including reduced transaction fees and faster confirmation times. Binance users will be able to benefit from a smoother and more economical trading experience when making Bitcoin deposits and withdrawals.
The co-founder of Terraform Labs, Do Kwon, has been sentenced to four months in prison in Montenegro after denying in court that he and his business partner Chang-joon Han used fake passports. Kwon himself stated that he was unaware of the alleged falsification of the Costa Rican passport he carried. “If I had suspected that it was a fake passport, I would not have traveled to numerous countries.”
The price action of the week is of huge technical importance. It indeed creates a crucial rebound on the 200-week moving average, as we had just lost it. The price of Bitcoin has rarely traded below this important level. The strength of the rebound and the buying pressure also suggest that this is not just a short-term surge, but indeed a rebound that could have legs.
Analyst Ki Young Ju adds a layer of optimism, stating that unlike some past major rallies, the current one is not so much the result of a short squeeze, but rather persistent spot buying pressure:
As mentioned by Twitter user and popular analyst “rektcapital”, this surge also breaks the diagonal resistance in place since April:
It remains to be seen whether Bitcoin can retest the $30,000 – $31,000 zone in the short term, which was the reversal level last April.
Rivemont Investments, manager of the Rivemont Crypto Fund.
The presented information is as of June 21st, 2023, unless otherwise indicated and is provided for information purposes only. The information comes from sources that we believe are reliable, but not guaranteed. This statement does not provide financial, legal or tax advice. Rivemont Investments are not responsible for any errors or omissions in the information or for any loss or damage suffered.
