ETFs and Major Events Futures To Normalize Cryptocurrency

Trading News - In the flourishing world of cryptocurrency, Bitcoin, as always, stands out, achieving remarkable gains amidst signs of a strengthening U.S. economy and increased institutional involvement. In the past week, the world's largest cryptocurrency by market capitalization, Bitcoin, soared by 8.51%, reaching a value of US$30,606. Furthermore, Ether, the second-largest cryptocurrency, experienced a weekly gain of 5.61%, increasing to US$1,887. All the top 10 non-stablecoin cryptocurrencies traded higher, led by Polygon, which saw a weekly gain of 5.96%.

This burgeoning interest in the digital asset industry comes in the wake of major traditional financial institutions investing in the sector. Asset manager Fidelity is reportedly on the brink of filing an application for a Bitcoin spot exchange-traded fund (ETF) in the U.S., following a wave of similar applications from asset managers, including BlackRock, WisdomTree, Invesco, and Bitwise. These applications underscore the growing confidence within these institutions about the profitability of digital assets.

It's crucial to note that all these applications need to secure the approval of the Securities and Exchange Commission (SEC). While Fidelity's previous attempt in 2021 was rejected, it successfully launched the Fidelity Advantage Bitcoin ETF in Toronto, Canada, later the same year, which has surged 75% since the start of 2023.

In a related development, HSBC, one of the world's top 10 banks, is purportedly offering Bitcoin and Ether futures ETFs on its investment platform for its customers in Hong Kong. HSBC's recent venture into cryptocurrencies marks a significant shift, as the banking giant has traditionally been skeptical about digital assets, preventing funds transfers from its accounts directly to cryptocurrency exchanges.

Meanwhile, speculation is intensifying about BlackRock's prospective success in breaking the decade-long prohibition on spot Bitcoin exchange-traded products in the U.S. Several asset managers have applied to launch such a fund since the Winklevoss twins' first application in 2013 when Bitcoin was trading around $1,000.

The SEC has historically rejected such applications, citing risks of fraud and market manipulation. However, some industry observers believe BlackRock, the world's largest asset manager, may succeed where others have faltered. This perception stems, in part, from the firm's excellent track record with the SEC - out of 575 filings, only one has been rejected.

BlackRock's application is subtly different from prior ones; a primary distinction lies in its proposed surveillance-sharing agreement with a U.S. spot trading platform operator for Bitcoin. In its rejection of a Bitwise application, the SEC highlighted that such an agreement could help mitigate the risk of fraud and manipulation.

Cryptocurrency bulls are keeping a close watch on the SEC's responses to these ETF filings, especially BlackRock's, which could significantly impact Bitcoin prices. The SEC's approval, denial, or decision to extend its review are eagerly awaited at each procedural deadline, with the final decision likely to be taken by February 2024.

ARK Investment Management, founded by veteran investor Cathie Wood and known for its pro-Bitcoin stance, is reportedly leading the race for a Bitcoin spot ETF. The firm, along with European asset manager 21Shares, filed an application for a spot Bitcoin ETF with the SEC in April, positioning them ahead of BlackRock's application.

Regardless of the SEC's decision, the Bitcoin halving event slated for March 2024 promises to fuel positive sentiment in the crypto market. If the SEC approves the BlackRock ETF, it could trigger a bull rally. Conversely, a denial could trigger a market tumble, which could, however, be stemmed by the ensuing halving event.

While these events unfold, Bitcoin continues to perform well, maintaining a position above $30, for brevity's sake.
This achievement can be attributed to several factors such as increased institutional interest, positive macroeconomic indicators, and anticipation around the potential approval of a Bitcoin ETF.
Other major developments in the cryptocurrency space also contribute to the positive outlook. Recently, El Salvador became the first country to adopt Bitcoin as legal tender, a milestone for the cryptocurrency industry. Other countries, especially those with volatile national currencies or high levels of inflation, might follow suit.

In the decentralized finance (DeFi) sector, the total value locked (TVL) continues to grow. This indicates an increasing interest and trust in decentralized lending platforms and other DeFi applications. In particular, Ethereum-based DeFi projects continue to dominate the market, which contributes to the strong performance of Ether.

Meanwhile, the rise of the non-fungible token (NFT) market adds another dimension to the crypto industry. Artists, musicians, and other creators are using NFTs to monetize their work, leading to increased public awareness and interest in the broader cryptocurrency market.

In conclusion, despite occasional market volatility, the long-term trend for the cryptocurrency market remains bullish. Increased institutional involvement, advancements in DeFi, the potential approval of Bitcoin ETFs, the adoption of Bitcoin as a legal tender, and the rise of the NFT market all contribute to the positive outlook for the cryptocurrency industry. However, as with all investments, potential investors should do their own research and exercise caution due to the inherently volatile nature of the market.
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