Bitcoin stands on shaky grounds
Regarding the risk-to-return ratio of the leading cryptocurrency, Bitcoin, Timmer explained, is significantly superior to assets such as the S&P 500 and gold, owing to its volatile nature. Therefore, he argued that a small amount of BTC “could go a long way” in the majority of the portfolios. “Bitcoin has been in a risk-reward class by itself so far this decade,” he continued.
The current valuation of cryptocurrencies on a global scale is $1.68 trillion, representing a change of 0.56% over the last 24 hours and 88.02% over the past year. At present, BTC holds a market capitalization of $845 billion, signifying a dominance of 50.26%. Stablecoins, meanwhile, have a market capitalization of $130 billion, or 7.75% of the total crypto market capitalization.
The macroeconomics specialist observed that the price increase does not appear to be a result of speculation seeking to outperform any news. This is owing to the small fraction of BTC held for less than three months or short-term speculators.
However, he stated that there has recently been an increase in interest in Bitcoin futures. This shows that some traders are preparing for an announcement. After the news, they may sell futures and acquire spot Bitcoin.
In addition, the macro background has shifted from loose liquidity to tighter Fed policy, making Bitcoin’s value argument less enticing than it was in 2020-21, he observed.
He also noted the M2 money supply, which grew during the previous crypto bull market but has been declining since the Fed began tightening in early 2022.
What is the future of Bitcoin and BTC ETFs?
Fidelity is competing with Blackrock and other financial behemoths for the US SEC’s approval of the spot Bitcoin ETF. Although the Commission has a limited time frame from January 6-10, 2024 to grant approval, whether or not the agency decides to further postpone the process for technical reasons is currently unknown.
Analysts have been predicting the en masse approval of several applications in order to prevent a sole company from gaining a first-mover advantage.
According to Jurrien, there has obviously been an increasing interest in recent weeks, as evidenced in the crypto community, and his judgment is that some of these positions are in expectation of SEC movement. In that instance, these investors may sell futures to purchase spot ETFs when the major announcement comes.
M2 money supply and Bitcoin cycles have historically been linked, with some experts claiming that this has been the driving force behind markets rather than the halving occurrences. He also tied the current market to the 1940’s.
