Up more than 50% heading into the summer months, bitcoin was already having a comeback year. A recent rally over $31,000 has the digital currency up over 80% now, re-igniting optimism.
The catalyst of institutional interest has helped to prop up bitcoin in the past. An influx of institutional investment could have a spillover effect into retail investors. In more recent news, global investment firm BlackRock filed for a spot price bitcoin ETF, which is injecting excitement in the crypto market for digital assets like bitcoin again.
The price spike came when confidence in cryptocurrency was waning despite a comeback year following 2022’s bearish run. Market pundits referred to this as the “crypto winter.” It also didn’t help that crypto exchange collapses, notably FTX, have shaken confidence further in the crypto space.
With the traditional financial markets also pushing higher amid macroeconomic tailwinds like fewer rate hikes and lower inflation, the increased risk-on sentiment could also help bitcoin’s upward trajectory.
“The long-term conviction of these financial behemoths — which include some of the most trusted names in asset management and retail investing — boosted sentiment and investor confidence when both were relatively low,” said Ryan Rasmussen, analyst at Bitwise Asset Management, in a CNBC report. “It’s a sign that the days are numbered for bad actors like Binance and FTX and that the crypto ecosystem is maturing. That’s a powerful catalyst for the industry, which has been plagued at various times by fraudsters and detractors.”
Others Join Filing Party
Other institutional firms have renewed their interest to bring bitcoin-related ETFs to the financial markets. Invesco and WisdomTree joined the filing party not too long after BlackRock’s move.
A bitcoin ETF could allow hesitant retail investors to get exposure via a regulated market exchange. This can help re-instill confidence in bitcoin as a viable investment asset for prospective investors, especially after recent exchange collapses.
The obvious advantage of this is the regulatory framework that surrounds a bitcoin ETF versus investing in the cryptocurrency directly. The aforementioned collapses certainly left involved cryptocurrency investors high and dry. However, a bitcoin-related ETF could help wash away the sour taste left behind.
“I think the spot bitcoin ETF is a watershed moment for bitcoin,” said Douglas Boneparth, a New York-based certified financial planner and president of Bone Fide Wealth, in a CNBC report.
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