As of late Monday, bitcoin had surged nearly 14% over the past seven days. That’s exceeded 42% for the first time since May 2022.
That’s been a boon for ETFs such as the Invesco Alerian Galaxy Crypto Economy ETF (SATO). Helped by its largest holding, the Grayscale Bitcoin Trust (GBTC), SATO surged nearly 7% on Monday. It has extended its year-to-date gain to 174.47%. That’s confirmation the fund, despite being mostly allocated to stocks in addition to GBTC, is correlated to bitcoin price action.
At about 150%, bitcoin’s year-to-date gain is comparable to that of SATO. For a substantial portion of 2023, the fuel for the cryptocurrency rally and upside for ETFs like SATO has been derived from speculation that the SEC will soon approve a spot bitcoin ETF. More recently, other factors are propelling digital currencies. Those include stiffer regulatory stances and speculation that the Federal Reserve will being lowering interest rates at some point next year.
Crypto Criminals Get Their Due
Whether it was Sam Bankman-Fried and the collapse of FTX or the recent problems at Binance attributable to founder Changpeng Zhao (CZ), crypto criminals are being punished. That’s to the liking of market participants.
“The CZ/Binance scandal and the FTX collapse which resulted in a month-long trial which convicted the FTX founder Sam Bankman-Fried of seven counts of fraud and conspiracy, triggered some short-term volatility. But the crypto market has continued to remain bullish,” noted deVere Group CEO Nigel Green.
The collapse of FTX, and CZ’s misdeeds, are not positives for the cryptocurrency market. But the good news for investors and funds such as SATO is that regulators are taking a hard line against crypto crooks.
As Green noted, it appears most of the major global central banks are done tightening rates. Recent price action in bitcoin and gold suggests the Fed could lower borrowing costs by the middle of 2024.
Then there’s the aforementioned catalyst of the SEC finally approving spot bitcoin ETFs. That would likely drive significantly higher adoption of the digital currency. And it could perhaps spark more upside for SATO.
“We believe Bitcoin ETFs are an imminent inevitability, and this would help drive crypto prices and mass adoption,” concluded Green. “Should SEC approval happen, it would be a landmark moment for Bitcoin. The approval by the financial regulator of the world’s largest economy of this spot ETF would show that Bitcoin is, without any question, part of the global mainstream financial system.”
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