Crypto

Analysis: Fever over BlackRock’s bitcoin fund faces chill of rate hikes and regulations

Published

11 months ago

June 26, 2023

Analysis: Fever over BlackRock’s bitcoin fund faces chill of rate hikes and regulations

[1/3]Some of Bitcoin enthusiast Mike Caldwell’s coins in this photo illustration at his office in Sandy, Utah, September 17, 2013. REUTERS/Jim Urquhart/File Photo

LONDON, June 26 (Reuters) – BlackRock’s plans for a bitcoin fund have helped push the world’s largest cryptocurrency to its highest in a year, but rising interest rates and a regulatory crackdown could choke off the rally, analysts and industry insiders say.

Bitcoin jumped more than 15% last week, rising above $30,000 for the first time since April, its best week since March, in large part driven by BlackRock (BLK.N) filing an application with the U.S. Securities and Exchange Commission to launch an exchange-traded fund (ETF) backed by bitcoin.

If approved, a bitcoin ETF from the world’s biggest asset manager could attract investors reluctant to buy the high-risk cryptocurrency directly.

The industry has been hit by a loss of investor confidence and heightened regulatory scrutiny this year after a series of collapses at major crypto firms in 2022 left investors saddled with losses.

In a market driven by sentiment, with sky-high valuation predictions not uncommon, the crypto industry saw BlackRock’s application as a sign that Wall Street is coming round to bitcoin, a view bolstered by the launch of a crypto exchange backed by Citadel Securities, Fidelity Investments and Charles Schwab.

But economic stresses could thwart hopes for a sustained rally, analysts say. Bitcoin’s gains slowed towards the end of the week, and on Monday it was trading at $30,405.

“Sticky inflation and economic recession concerns are still longer-term risks that we have to be cautious about,” said Youwei Yang, chief economist at bitcoin miner BTCM.

Reuters Graphics

BITCOIN’S BUYERS

“From our perspective, and based on conversations with sell-side desks, this rally was led by institutional buyers,” said Wes Hansen, head of trading and operations at crypto hedge fund Arca.

At crypto broker Genesis Trading, “dozens” of top-tier clients have increased their exposure to bitcoin following the BlackRock filing, said Gordon Grant, managing director of sales and trading.

A spot bitcoin ETF could rebuild investors’ confidence in their ability to move U.S. dollars in and out of cryptocurrency, after the collapse of crypto lenders Signature, Silvergate and Silicon Valley Bank in the United States earlier this year, Grant added.

“The market is now pricing an ability to put a significant amount of fiat – if there is the volition to do so – into bitcoin, and that is such a significant development.”

Luuk Strijers, chief commercial officer of crypto derivatives exchange Deribit, said that he’d seen a significant increase in call buying, pointing to “bullish momentum.”

To be sure, the SEC has yet to approve BlackRock’s application and it has so far rejected proposed ETFs that track bitcoin from the likes of Fidelity and Cboe Global Markets. The SEC has cited concerns about market manipulation in such products. Digital asset manager Grayscale had its proposal for a spot bitcoin ETF rejected last year.

“In previous spot ETF rejections, the SEC has cited concerns about market manipulation, and BlackRock’s application appears to take a different approach to address this sticking point,” said Riyad Carey, a research analyst at Kaiko.

LESS CAPITAL OVERALL

After surprise rate hikes in Australia and Canada, and as the Federal Reserve forecasts two more hikes, investors are now betting that interest rates will remain higher for longer.

Bitcoin had benefited from ultra-low interest rates, which incentivised investors to take riskier bets in search of returns.

Genesis Trading’s Gordon Grant said higher rates mean investors can get returns in other assets.

“A lot of liquidity, nominally, has been withdrawn from the system… There’s just less capital overall, and not only that, cash is now no longer trash.”

Although bitcoin has recovered from last year’s low of $15,479, it still trades at less than half of its all-time high of $69,000, reached in late 2021.

Analysts say prices have also been depressed by regulatory uncertainty, as the SEC is increasingly cracking down on what it sees as a culture of rule-breaking across the industry. The SEC earlier this month sued major exchanges Coinbase and Binance.

“The uncertainty around SEC activity had led to softness around price action, with Blackrock coming out “in support” it feels a little different,” said Usman Ahmad, CEO of Zodia Markets, the crypto exchange of the venture arm of Standard Chartered (STAN.L) and Hong Kong crypto firm BC Technology.

“Albeit – there are likely to be further challenges with interest rates continuing to increase,” he said.

Reporting by Elizabeth Howcroft, additional reporting by Tom Wilson, Editing by Louise Heavens

Our Standards: The Thomson Reuters Trust Principles.

Elizabeth Howcroft

Thomson Reuters

Reports on the intersection of finance and technology, including cryptocurrencies, NFTs, virtual worlds and the money driving “Web3”.

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Crypto

Why Self-Custody Is Vital for Bitcoin Security- Casa CEO Nick Neuman – Interview Bitcoin News

Published

6 hours ago

May 6, 2024

Press Room

Why Self-Custody Is Vital for Bitcoin Security- Casa CEO Nick Neuman – Interview Bitcoin News

Casa helps people store bitcoin and other digital assets by empowering them to own, secure, and manage their private keys safely and easily. Founded in 2016, the company helps its members take self-custody of their assets with multi-key vaults for greater protection against single points of failure, such as hacks, theft, and accidents. Nick Neuman […]

Crypto

Russia's Crypto Clampdown: Tight Regulations Aim to Curb Cryptocurrency Activities – TokenPost

Published

13 hours ago

May 6, 2024

Press Room

Russia's Crypto Clampdown: Tight Regulations Aim to Curb Cryptocurrency Activities – TokenPost

Russia is poised to enact stringent regulations on cryptocurrency trading, aiming to curb the mass trade of digital assets like Bitcoin within its borders. This move, driven by geopolitical tensions and sanctions, signals a significant shift in the country’s approach to digital finance.

Russia’s Cryptocurrency Policy Shift: Centralized Control and Regulatory Uncertainties

In a recent report by CryptoPotato, the government’s decision to control the bitcoin industry is a significant step. Only miners and projects sanctioned by the Central Bank will be permitted to operate. Importantly, any creation of cryptocurrency exchanges and over-the-counter (OTC) services outside the experimental legislative framework will be deemed illegal.

Anton Gorelkin, Chairman of the State Duma Committee on the Financial Market, has clarified that he does not support a complete ban on bitcoin circulation in Russia.

In a Telegram post, he clarified that the restriction is not intended to prohibit all Bitcoin use but rather to govern the formation of cryptocurrency exchange platforms within Russia’s legal framework.

Gorelkin further claims that geopolitical circumstances, including considerations of international relations impact the establishment of a legitimate Russian crypto infrastructure. He said that allowing such infrastructure would expose Russian enterprises to Western sanctions.

Gorelkin further stated that the limitation may be lifted and that customers can continue to use foreign crypto exchanges and OTC services as previously. However, the impact on several OTC crypto services in Moscow remains undetermined.

Anatoly Aksakov’s Agenda: Bolstering Ruble with Stricter Cryptocurrency Regulations

Gorelkin’s latest article needs to clarify Anatoly Aksakov, Chairman of the State Duma Committee on the Financial Market, who stated that the controversial measure aims to limit non-Russian cryptocurrency operations to reinforce the ruble’s dominance.

Aksakov stated that the law would provide exemptions for crypto miners and Central Bank-backed pilot projects under a trial legal framework, citing that crypto mining contributes significantly to Russia’s tax revenue.

Meanwhile, Russia’s Finance Minister, Anton Siluanov, has urged for a more balanced approach, arguing for regulation permitting the use of cryptocurrencies in local and foreign transactions.

Photo: Microsoft Bing

TokenPost | [email protected]

Crypto

May 2024’s Essential Cryptocurrency Picks: Investors Buzzing Over BlockDAG X1 Mobile Mining App Amid Forecasts for Ondo, Optimism, and Aptos – NullTX

Published

20 hours ago

May 5, 2024

Press Room

May 2024’s Essential Cryptocurrency Picks: Investors Buzzing Over BlockDAG X1 Mobile Mining App Amid Forecasts for Ondo, Optimism, and Aptos – NullTX

Investors are keenly looking for the next ample opportunity as the cryptocurrency market witnesses a surge in 2024. Amongst the frontrunners, BlockDAG steals the spotlight with its innovative mining technology, outpacing other popular options like Ondo, Optimism (OP), and Aptos. BlockDAG’s user-oriented mining solutions have positioned it as a top choice in May 2024’s cryptocurrency forecasts. The anticipation builds around the upcoming June 1 launch of BlockDAG’s X1 Mobile Mining beta app.

1. BlockDAG: Pioneering Simplified Mining Solutions

BlockDAG is reshaping the crypto-mining landscape with its easy-to-use mining options and robust technological backbone. The X1 mobile mining app from BlockDAG allows individuals to mine up to 20 BDAG coins daily using just their smartphones, offering a perfect start for novices and a convenient tool for tech enthusiasts. Moreover, BlockDAG’s range of home mining devices, including the X10, X30, and X100 miners, provides various power levels and efficiency, catering to different mining scales. These devices are built with advanced ASIC technology to ensure high performance and profitability.

This approach simplifies the mining process and focuses on energy efficiency and accessibility, promoting a more inclusive cryptocurrency environment. With impressive sales of over 5200 miners and revenues nearing $2.5 million, BlockDAG is committed to making crypto mining accessible and lucrative. The forthcoming release of the BlockDAG X1 Mobile Mining app is set to enhance its market presence further.

Ondo’s value has soared by 2846.67% in the past six months, bolstered by a recent 7.44% weekly gain. With its price currently oscillating between $0.64 and $1.03, Ondo is on a trajectory towards potentially hitting $1.24 and possibly $1.63. While the outlook is promising, market shifts could temper this ascent, and investors are advised to remain vigilant. Nonetheless, Ondo is attractive for those looking to leverage its bullish trend.
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3. Aptos: Experiencing Fluctuations with Growth Potential

Aptos has shown a 7% increase in the last week, despite a 40% fall over the previous month. Prices fluctuating between $8.97 and $10.65 suggest a possible climb to $11.31 or even $12.99 if the upward trend continues. However, the medium-term downturn poses risks, demanding cautious investment strategies. Aptos presents a compelling choice for those prepared to manage its price volatility.

4. Optimism (OP): Facing Challenges with Promising Growth

Optimism has demonstrated volatile yet promising market dynamics, with a 14% rise over the last week counterbalanced by a 31% decrease in the past month. Prices ranging from $2.14 to $2.64 indicate potential recovery targets at $2.83 and $3.33. Despite mixed market signals, OP’s resilience suggests it might be poised for near-term recovery and growth.

BlockDAG: Leading May 2024’s Crypto Innovations

While Ondo, Optimism, and Aptos offer notable opportunities, BlockDAG emerges as the clear leader in the May 2024 cryptocurrency market. Its groundbreaking technology of the X1 app and comprehensive product suite equip new and experienced investors with the tools to succeed in the evolving digital currency arena. BlockDAG not only leads the top four expert crypto picks but also sets a high standard for innovation and profitability in the crypto industry.

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