There is finally some reason to cheer for cryptocurrency enthusiasts. Bitcoin price has finally crossed $8,000 after two months. At the time of writing, BTC is trading at around $8,260, up by nearly 6% over the last 24 hours. So, is this a start of the bull market or is BTC again flattering to deceive?
Smart money moving in
There is a lot of belief in the cryptocurrency world that the next rally will be fueled by ‘smart money’ – established financial giants, hedge funds, institutional investors and the likes. The recent bullish trend observed in the market is also powered by the possibility of a Bitcoin ETF. This ETF, filed through the Chicago Board of Exchange, has to be approved by the Securities and Exchange Commission (SEC) in the US. Now, that the SEC has clarified that Bitcoin is not a security, it is quite likely that this Bitcoin ETF will be approved soon.
According to a report by The ICO Journal, two sources from the SEC and Commodity Futures Trading Commission (CFTC) are certain about approval for the Bitcoin ETF, among other crypto ETF products. They have also said that concrete regulations are also around the corner from the SEC and CFTC. A likely outcome is possible by September.
If the ETF is indeed approved, it will not be surprising to see big money coming in through a compliant product. A Bitcoin ETF will also make it easier for investors to take strategic bets against Bitcoin without worrying about regulatory scrutiny, security or trust in third-party cryptocurrency exchanges.
Coinbase, one of the world’s leading cryptocurrency exchanges, has also been preparing for an influx of smart money as it has built a host of cryptocurrency investment products geared towards institutional investors, Earlier this month, the exchange had launched Coinbase Custody – a custodial solution for institutional crypto products.
Will this rally sustain?
The current Bitcoin dominance is at 47% which means that any positive impact on the price of the world’s leading cryptocurrency will have a huge impact on the market. At the time of writing, other top cryptocurrencies have also surged by a few percentage points in the last 24 hours.
However, leading cryptocurrency analysts have advised caution looking at Bitcoin’s past behaviour. With May witnessing a sharp drop, another pullback may be on the cards. But, many also think that the worse may be over for Bitcoin, and any drop might not be as bad as the May-July downtrend.
Our verdict: While there is more excitement in the market amidst a sea of green, we would advise a wait and watch approach. We have seen way too many pullbacks since January 2018 and we simply cannot be confident about a trend reversal till something positive is actually confirmed. Unless and until this Bitcoin ETF is approved and friendlier regulations come through, this market will still be in a fluid state in the short term. In the long-term, however, we still remain extremely bullish!