Depictions of the cryptocurrency Bitcoin are seen in this illustration, August 10, 2022. REUTERS/Dado Ruvic/Illustration
Dice Ruvic | Reuters
It seems that bitcoins has a good set up for the new quarter, with major institutions showing confidence in both the future of cryptocurrencies and their US regulators. end of the month. Don't get too carried away though โ crypto is still part of the broader market, which remains in a challenging macro environment.
The third quarter is historically the weakest for bitcoin. The average third-quarter gain since 2014 is just 4.67%, according to CoinGecko, and it posted a positive third-quarter for only four of nine in its lifetime.
Bitcoin Historic Quarterly Performance Since Q4 2013
| Q1 | Q2 | Q3 | Q4 | |
|---|---|---|---|---|
| average return | 6.88% | 36.47% | 4.67% | 93.38% |
| Number of positive periods | 4 out of 10 | 6 of 9 | 4 of 9 | 6 out of 10 |
Fountain: CoinGecko
Before the recent spate of requests to launch spot bitcoin ETFs in the US injected new optimism into the crypto market, it was a frustrating second quarter for traders. Between the end of the banking crisis in May and the BlackRock Bitcoin ETF Presentation On June 15, regulatory pressure weighed heavily on sentiment and bitcoin traded sideways. That calm could return in the next three months as industry drivers battle with macro drivers.
"It is clear that [the Fed] He's still not entirely comfortable with the direction of the headline inflation numbers," Christopher Ferraro, Galaxy Digital's president and chief investment officer, told CNBC. even a decrease in the rate".
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the federal reserve left interest rates unchanged at the end of their June meeting, but said two more could come later this year. Some on Wall Street anticipate the Fed will act in July and September. Powell has said that the FOMC has not decided whether a further hike is likely in July.
"Every day you see disparate and sometimes orthogonal data points, is the economy growing? Is it shrinking? We're headed for a recession right?" Ferraro added. "It's a very uncertain macro environment, which will make this not a one-way move for any asset class, let alone Bitcoin."
Cantor Fitzgerald's Elliot Han said that while Bitcoin eventually recaptured the $30,000 level, it was unable to hold it for several weeks as macro challenges "are currently dampening the upside for cryptocurrencies."
Regulation and ETFs
Beyond the macro context, it is clear that developments in US regulation and ETF applications will continue to be the main themes in the third quarter. The spate of efforts to get a spot bitcoin ETF approved came at the height of hostility from the Securities and Exchange Commissions toward cryptocurrencies and many hopeful institutions like black rock, Fidelity and investment โ which filed for a bitcoin ETF with Galaxy in June โ may force some change. However, it could take a while.
"From a timing perspective, I think it's largely unknown" when an ETF decision might come, Ferraro said. "But...all of these institutions have real concerted efforts and probably wouldn't have launched the effort now if there wasn't a strong belief that the market and regulators, particularly the SEC, were ready to allow regulated products."
"Given all the regulatory uncertainty and the court cases that are taking place...it's actually an opportune time for regulators to allow regulated products into the market and help clear up some of the concern or lack of clarity. ", he added.
The rest of the world
While that uncertainty continues in the US, other parts of the world are taking a more industry-friendly stance. UK regulators have developed a โRegulatory Sandboxโ to allow cryptocurrency companies to test new innovations, mainland Europe has an established market for exchange-traded products for cryptocurrencies, and Hong Kong has been clear and vocal about its desire. to become a cryptocurrency hub for the world. .
โThere is still a disparity in the treatment of cryptocurrencies in the US and the rest of the world,โ Han said. โThe question is whether the United States will follow suit or continue its litigious approach.โ
There are a growing number of US companies that are no longer willing to wait for regulatory clarity as the price of bitcoin rises, he added, with many expecting a big price increase in the spring that they won't want to miss.
Bitcoin is up over 80% YTD
โSome are looking to relocate their headquarters, or at least set up large offices, in crypto-friendly jurisdictions,โ Han added. more US cryptocurrency companies looking to create offshore offerings" such as Ripple and coin base.
While Ferraro and others remain optimistic about the future of cryptocurrencies and are not concerned that regulators will eventually find an appropriate path for American cryptocurrency companies, it could end up being too little too late.
"I'm optimistic that we'll get it right," Ferraro said. "I'm afraid the United States is taking its time, and while that's happening, rigid capital and rigid intellectual capital are being formed in other parts of the world, and then it's hard to undo."
