“We’re getting closer to the end of the Fed tightening cycle,” Alex Coffey, TD Ameritrade senior trading strategist, said in an interview. “The acceleration of monetary policy is probably over”, which “can be seen as beneficial for bitcoin”.
But crypto fans have also become excited about the prospect of staid Wall Street institutions showing signs of embracing the space, with BlackRock, the largest asset manager, stirring up buzz after it filed for a spot-bitcoin ETF. Although such a product does not currently exist in the US, the potential approval of one by regulators is a thrilling prospect for crypto fans as it could mean that the market opens up to a bigger investor cohort.
“Several institutional projects were put on hold after 2022,” wrote K33’s Bendik Schei and Vetle Lunde in a note. “The recent announcements flag that well-renowned major institutions are comfortable offering crypto services, changing the perceived risk of participating in crypto markets from other institutional investors and financial conglomerates.”
The pair cite the Bitcoin CME futures premium surging to 20-month highs and CME’s bitcoin-denominated open interest approaching all-time peaks as evidence of institutional involvement.
To be sure, a spot- bitcoin ETF has never before gotten a green light from US regulators, and it’s not a sure fact that one will get approved this time around.
The token’s recent strength has also incentivised some investors to wade back in, according to K33. Volumes, though they’re down significantly from previous highs, have climbed in recent days, a positive development for an industry that had suffered a mass exodus of participants following last year’s numerous fallouts.
“I think of it as a good risk-on, risk-off indicator for the market. When there’s excess money floating around in the system looking for highly risky bets in the market, Bitcoin tends to do really well,” said Kara Murphy, CIO at Kestra Investment Management. “When people are in risk-off mode, money is more scarce,” she said. ” It is a highly levered play on a macro environment.”
Bloomberg
