The possible arrival of bitcoin to regulated markets—and safer than exchange platforms—has once again excited a sector more accustomed to shocks. The price of the world’s leading digital currency by trading volume has soared this week. The peak was experienced with the increase, of almost 15%, between Monday and Tuesday until reaching $35,198 (about 32,600 euros at the exchange rate), its highest price since May 2022 and half of what it was worth. at its peak, almost $70,000. He rally The stock market began following the announcement of possible regulatory approval in the United States that would allow users to invest in bitcoin cash funds on secondary stock exchanges and not only on platforms such as Binance or Kraken.
Specifically, the value of the cryptocurrency began to rise when its fund listed on BlackRock – the largest asset manager in the world – appeared on a list of the DTCC trading platform, which is responsible for regulating these products in the US market. Eric Balchunas, analyst at Bloomberg Intelligencewho The possible approval was advanced through the X platformwas also responsible for explaining after the fact that this appearance “does not mean that it was technically approved, but it was practically checking all the boxes that are needed to launch an ETF [siglas en inglés de Exchange Traded Fund, o fondo cotizado] because the ticker They are usually announced just before launch.”
On paper, this would lead to the bitcoin market receiving a flood of liquidity, receiving billions of new dollars, thus increasing trading volumes and simultaneously pushing up its price.
Spot ETFs are investment funds that track the movement of a stock index, that is, they fluctuate with the price of—in this case—the cryptocurrency and replicate its price. If bitcoin rises or falls in price in the market, the exchange-traded fund does the same. Its acquisition is similar to buying shares on the New York Stock Exchange.
Currently, bitcoin is traded only in futures ETFs, a type of contract that obligates investors to deliver a certain price at a future date. A more common transaction in commodity markets, such as gas and oil, and of a speculative nature because contracts are negotiated with the prices of the coming months. At the moment, the exchange of cryptocurrencies happens mainly on immediate trading platforms (trading) such as Binance, Kraken or FTX, immersed in a large judicial process for fraud.
Miguel Caballero, CEO of Tutellus, a virtual cryptocurrency school, defends that exchange-traded funds and exchange platforms are products that can coexist over time. “Those who invest in BlackRock plan to maintain their investments in the long term, while users of the trading platforms trading They look for immediate results,” shares the expert. “It could be the equivalent between investing in an index like Nasdaq or directly buying a start up [compañía emergente]”, exemplifies Ion Juaregui, director of Latin America at the Activtrades exchange platform.
Félix Fuertes, founder of the virtual school Formación en Inversión, explains that funds of this style do not usually go to the trouble of launching an ETF if they do not have validation in the market and “this usually comes from investors, who will have seen that “They are missing the opportunity to commission this type of product.”
BlackRock submitted the application to have its bitcoin ETF in cash in June, but immediately ran into reluctance from the SEC, the markets supervisory body in the United States, which has intensified its offensive against cryptocurrencies after the fall of the digital currency Terra and finding irregularities on platforms such as Binance and FTX. In 2021, SEC Chairman Gary Gensler warned that the lack of regulation in the cryptoasset market was raising “concerns about the potential for fraud and manipulation.”
The highest regulatory entity considers that bitcoin’s volatility may be too intense for ordinary investors. The evolution of this digital asset has taken the form of a roller coaster since its appearance. In 2020 it grew by more than 300%; the rise softened in 2021 (60%) and suffered a loss of 64% in 2022.
Caballero emphasizes that, although the SEC has tried to delay the approval of the BlackRock ETF as much as possible, “a time has come when it has no more weapons to continue stopping it and the courts are agreeing.” [a la firma privada]”. In August, Grayscale Investments, another major fund manager, won a court ruling that will allow it to move forward with transforming its bitcoin trust into an ETF.
In recent months, several requests have accumulated to bring bitcoin to current trading. “Ark invest’s ETF application has a final resolution date of January and all others are in March. Taking into account BlackRock’s weight in the market – with participations in most sectors – it is possible that it will pressure the SEC to approve the ETF at the same time as Ark Invest, so as not to be left behind and be able to capitalize before the rest,” says Fuertes, who believes that, although it takes longer than necessary, the arrival of bitcoin to more regulated markets seems inevitable.
The rise in the price of the main virtual currency, which this Friday fell to the $34,000 barrier, also increased the value—as usual—of other popular cryptocurrencies. Etherium, the second token With more movements in the market, on Monday it managed to reach above 1,700 dollars per unit (about 1,610 euros at the current exchange rate) and Solana climbed to its best moment of the year, touching 34 dollars (31 euros). In both cases, still miles away from their best days when they were listed for $3,910 and $225, respectively, according to CoinMarketCap.
The end of ‘crypto winter’
Investors remain attentive to the next bullish catalyst for the virtual currency created by Satoshi Nakamoto, which is the reduction of the production rate of bitcoins by half — known as halving— scheduled for April 2024. This mechanism decreases the supply of the available cryptocurrency, which, in theory, underpins its value.
Mirva Anttila, director of WisdomTree, an asset manager based in New York, estimates, however, that “it probably won’t have as much effect at this point, when at least 19.7 million bitcoins have already been minted, of a total of 21 million”, rather, it points out that “if the liquidity of central banks improves and they begin to stimulate economies by lowering interest rates, a favorable environment could be created for crypto assets to take full advantage of other bullish catalysts” . All the experts consulted agree that if the SEC’s resolution is combined with the date of the halving there could be a significant imbalance between supply and demand and a significant appreciation of this virtual currency.
So when will what investors have dubbed crypto winter? Fuertes points out that the barrier that must be overcome is $42,000 (almost 40,000 euros) because “it is just an area of great accumulation that occurred in the last big price increase of 2021, when many people bought bitcoin, so which is your last loss zone.” “Even so,” he adds, “since the people know this traders institutional, they usually react by liquidating to put pressure on buyers, so the price could also fall.”
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