With less than a year until the Bitcoin (BTC) halving event, multiple financial giants have applied for spot Bitcoin Exchange Traded Funds (ETFs), which will kick off the 2020-2021 bull market. This is the last scenario we saw before.
Institutional interest in the sector dried up after the collapse of crypto giants such as FTX in the prolonged crypto winter of 2022. Bitcoin and many other cryptocurrencies traded roughly flat as several crypto exchanges came under regulatory scrutiny.
However, following the news that major financial institutions such as BlackRock, Fidelity, and Valkyrie were applying to list spot Bitcoin ETFs, the price of Bitcoin recovered to levels above $30,000, pushing the cryptocurrency market into the spotlight. Investment has picked up again.
Several large institutional investors have filed spot Bitcoin ETF applications with the U.S. Securities and Exchange Commission (SEC) in the past, but all have either withdrawn their applications or faced outright rejection from regulators.
In October 2021, the SEC approved the first Bitcoin futures ETF, the ProShares Bitcoin Strategy ETF, to list on the New York Stock Exchange on October 19, 2021.
However, the spot Bitcoin ETF filing by wealth management giant BlackRock has increased the chances of the SEC approving the first spot Bitcoin ETF. According to Bloomberg Senior ETF Analyst Eric Balchunas, he sees a 50% chance that BlackRock will approve a spot bitcoin ETF.
The most recent spate of ETF filings began with BlackRock’s filing with the SEC on June 16th. WisdomTree, Invesco, and Valkyrie also applied in the days and weeks that followed.
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On June 28, ARK Invest, which had previously applied for a Spot Bitcoin ETF in June 2021, amended its application to be similar to BlackRock’s application. The next day, asset manager Fidelity Investments also applied for a spot Bitcoin ETF. To date, a total of seven major institutional investors have applied for Spot Bitcoin ETFs.
Some industry observers believe 2023-2024 will be critical for spot Bitcoin ETF approval. “Inflation is rampant, the money supply is volatile, interest rates are high, and companies are making decent returns,” Robert Quotley Janeiro, chief strategy officer at crypto exchange Bitulu, told Cointelegraph. The timing is right,” he said. Cryptocurrencies need to work in an economic environment where interest rates and inflation are key considerations. “
Institutional Trust in Bitcoin
Bitcoin has weathered the aftermath of 2022 admirably, recovering more than half of its bear market losses, largely thanks to continued institutional interest in the asset.
In fact, there are significantly more institutional investors participating in the cryptocurrency market today compared to just a year ago. Until 2022, financial institutions will keep a safe distance from the market and even MicroStrategy has stopped regular BTC purchases.
Many large funds and companies are interested in cryptocurrencies and are exploring the possibility of investing in them.
Despite market volatility, global institutions show a steady interest in cryptocurrencies. Bitfinex Chief Technology Officer Paolo Ardoino told Cointelegraph that Bitcoin has tremendous value for its utility and uniqueness as a completely rare asset that can never be depreciated. said. “Most traditional financial institutions are aware of that,” he said, adding, “At a time when both major developed and emerging markets are experiencing record inflation, the value of bitcoin is falling on the market. It is not surprising that it is being better understood,” he added. “
“Recent new filings for Bitcoin Spot Market ETFs by some of the world’s most important asset managers indicate that demand for Bitcoin exists and will continue to grow, not only among issuers but also among investors. It will not only demonstrate increased institutional demand for bitcoin, but also attract new retail investors and drive broader participation,” said Ardoino. .
Over the past year, many institutions have distanced themselves from cryptocurrencies, much of it due to the public relations disaster wrought by FTX, exacerbated by bank failures. Modulus CEO Richard Gardner told Cointelegraph that in the aftermath of FTX he believed financial institutions could foresee a stalemate in the crypto industry and reassess their decisions before the cryptocurrency surged. He said he chose to avoid political and public reaction. .
“We are at the stage where they are beginning to weigh the risks and benefits of returning to the fray. It will change based on the regulatory environment: as governments put together the full regulatory regime and bureaucrats decide how to interpret the law, agencies will assess responses and move forward accordingly. will be,” Gardner said.
MicroStrategy, a major Bitcoin investor and one of the driving forces behind BTC’s institutional introduction in 2020, continues to buy up Bitcoin in 2023. When the BTC price fell below $16,500 and the company faced heavy losses, CEO Michael Thaler claimed there was a bitcoin hoard. We have no intention of selling and will continue to add more BTC to the Treasury. MicroStrategy currently holds 152,333 BTC acquired for approximately $4.52 billion at an average price of $29,668 per Bitcoin.
Inflows from Institutional Investors Revive Bull Market Optimism
While the 2017 bull market was driven by retailer interest, the 2020-2021 bull market will be driven by inflows from institutional investors, with MicroStrategy, Tesla and several other publicly traded companies adding bits to their balance sheets. Added coins.
Gracie Cheng, managing director of crypto exchange BitGet, told Cointelegraph that financial institutions will act quickly once they see “steady and predictable retail interest.” “The cumulative influence of institutional investors has exceeded that of retail investors, and therefore, institutional investors will continue to be the driving force behind cryptocurrency market capitalization growth,” Chen said.
She also stressed that increased interest from institutions could further drive adoption of cryptocurrencies and inspire the next bull market.
“Analysts predict that Bitcoin’s price could double if BlackRock’s ETF application alone is approved. BlackRock’s potential institutional investor base and Considering the influence, the approval of the company’s spot BTC ETF will have a greater impact on the growth of the cryptocurrency market.BTC spot ETF application may stimulate competition among related financial companies. will move more money from traditional markets to Web3.”
Apart from the institutional push, there have been major developments in the retail market, such as Hong Kong opening the door to cryptocurrency exchanges to serve retail customers. Ben Caselin, vice president of crypto exchange MaskEX, told Cointelegraph that during the last bull market, “U.S. institutional investors were the main drivers of the rally, but they probably aren’t ready to get deeply involved. Instead, we basically pursued profits and took actions that were no different from those in the retail industry.” Acting on the hype. “
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“We expect this bull market to again be Asia-led, with Hong Kong likely to take the lead in the region, but based on my personal observations there, we also expect a significant boost from the Middle East, especially China. The United Arab Emirates, Saudi Arabia and other oil-rich regions,” he added.
The next Bitcoin halving is scheduled for April 2024, and rising institutional interest is seen as a bullish sign for the Bitcoin price and the broader cryptocurrency market. The bull market historically started towards the Bitcoin halving event when the amount of his BTC reward per block would be halved every his 4 years. Retail traders and big institutional investors are rushing to add bitcoin to their portfolios, and the scarcity factor is driving prices up.
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