According To Galaxy Digital CIO, 2 Catalysts Will Propel Bitcoin Higher Into Year End

The price of Bitcoin (BTC) dropped below $26,000 this week against a background of decreased activity in the market, China’s property woes, and a report that SpaceX sold its Bitcoin holdings. The price of Bitcoin on Binance today is $26,014.41; Bitcoin is -0.08% in the last 24 hours. There seems to be a general lack of interest in the cryptocurrency market, so it shouldn’t come as a surprise that Bitcoin opened the trading week at roughly $29,400 and went down to approximately $25,697.

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The question now is, what to expect from Bitcoin in the future? It’s difficult, if not impossible, to predict the price of Bitcoin. The question everyone should be asking is: Will Bitcoin rise in value? Indeed, the cryptocurrency experienced consecutive lows, but it has a solid chance of recovery. More exactly, there’s always a chance it will come back stronger, even if the road to recovery is very long. A full financial meltdown is highly unlikely, but if it materializes, it might strengthen Bitcoin.

According to Galaxy Digital CIO Christofer Ferraro, two factors will influence the direction of Bitcoin for the rest of the year, namely the approval of Bitcoin sport ETFs and United States regulatory developments.

Why Is a Spot ETF Good for Bitcoin?

A spot Bitcoin ETF is basically an exchange-traded fund that tracks the price of Bitcoin. Bitcoin is traded for immediate delivery, so the value of the spot Bitcoin is directly correlated to the price of Bitcoin. The ETFs available at present can be acquired on retail-friendly mobile applications and traded continuously throughout the day. If it is approved in the United States, the Bitcoin spot ETF will be available for trading on traditional avenues such as the New York Stock Exchange.

A Bitcoin spot ETF gives investors indirect exposure to Bitcoin, therefore, minimizing the risk factors. To be more precise, it offers the same investment capabilities as a Bitcoin futures ETF, yet it only allows users to invest in Bitcoin’s spot price. It’s not necessary to use an exchange, but owning a Bitcoin spot ETF can be more expensive than simply purchasing Bitcoin on an exchange. Cryptocurrency advocates are struggling to establish a Bitcoin spot ETF, believing the markets will take Bitcoin more seriously.

The Securities and Exchange Commission (SEC) of the United States has delayed crypto ETF applications, so firms could wait until March 2024 to hear a decision. In June this year, BlackRock, the global asset manager and technology provider, added its application to the stack of applications, hoping the federal agency would give the application a serious look. Unfortunately, the chances of Bitcoin spot ETF approval are slim to none, as reported by John Reed Stark. Stark declared that the SEC won’t give the nod soon.

As a matter of fact, it might never happen, as there’s evidence the cryptocurrency market is manipulated. Stark’s allegation comes in response to a recent study undertaken by the Network Contagion Research Institute and a CNCB report claiming that manipulation is carried out in various ways, highlighting a lack of ethics and regulatory environment. The regulatory blind spots are some of the main reasons for turning down Bitcoin spot ETF proposals, so the current scenario requires more consumer protection, transparency, licensure, insurance, and net capital requirements.

Industry Leaders Condemn the US And Its Approach to Regulation

The United States is no longer the premier location for FinTech companies due to its lack of clear rules for the cryptocurrency industry. It must move faster and with more clarity (green light or red light). Needless to say, cryptocurrency companies are angry with the US government regarding the absence of definitive guidelines and the SEC for its actions against digital currency firms. As opposed to other countries, the United States hasn’t devised a comprehensive framework to allow cryptocurrency and blockchain firms to operate.

The only piece of cryptocurrency regulation in the United States is the Commodity Futures Trading Commission’s ruling that Bitcoin and Ethereum are commodities. The CFTC becomes involved when a cryptocurrency is used in derivative contracts or if there’s fraud or manipulation involving a virtual currency traded in interstate commerce. The CFTC has issued several guidance letters on cryptocurrency, providing more details on how the agency wants to control the asset class.

Bitcoin regulation can make the market safer, meaning it will be a less risky investment. Even if the IRS and the SEC have proposed regulatory frameworks, there’s much more to do. Despite the fact that buying and selling Bitcoin with blockchain technology is regarded as safe, there are multiple scams with reference to cryptocurrency investments. The interest in Bitcoin draws attention to the fact that the regulatory apparatus is incapable of overseeing financial technology. Regulating Bitcoin would give it legitimacy, eliminating the risks to consumers and financial stability.

The future of Bitcoin will be shaped by how regulations transpire. The United States is one of the many administrations struggling to manage cryptocurrency, and given that its economy has the power to globally influence financial markets, there’s a lot at stake. For the time being, there are no rules for spot markets, favorable laws in one jurisdiction are used to circumvent less favorable regulation elsewhere, and crypto companies find it hard to strike a balance between control and agility.

Wrapping It Up

According to Christofer Ferraro, institutional interest in Bitcoin is growing, with hedge funds, asset managers, and family offices acknowledging its potential. Retail investors are also starting to buy Bitcoin owing to the possibility of significant profits, especially during times of market turbulence. Whether or not the bullish sentiment will stay, only time will tell. Everyone ought to be confident in Bitcoin’s performance, not just for the future of tokenization but also for the digitalization of the economy.

Blockchain is the underlying technology of Bitcoin, but it’s found many uses besides Bitcoin. Galaxy Digital CIO should begin to say yes to blockchain technology to explore strategic business opportunities, but attention must be paid to the fact that it’s not without its challenges. As mentioned earlier, laws still need to be put in place to accommodate use cases.

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