Bitcoin ( USD-BTC) jumped more than 10% Friday as investors cheered positive remarks by officials regarding the industry’s regulation.
Digital currencies suffered a difficult September, despite developments in China and volatile risk appetite. But, this week’s signals from U.S regulators seem to have given sentiment a boost and sent Bitcoin to its largest intraday rally since July.
Other cryptocurrency like Ethereum ( EETH-USD), Cardano( ADA–USD), and Dogecoin [ DOGE–USD] followed suit, adding at minimum 6% each day.
According to CryptosRus founder George Tung, “Traditionally with Bitcoin, September has been the weakest month.” Yahoo Finance was informed by George Tung.
“Also, there’s just so much going on. Tung explained that yesterday we had a $3 Billion options expiry for Bitcoin. “That could have held Bitcoin back this week, but now we are in October and things look a lot better,” Tung explained.
The Chair of the Securities and Exchange Commission (SEC), Gary Gensler, reiterated Wednesday his support for the approval of a Bitcoin exchange traded fund (ETF). This is despite the fact that the agency has been criticised for its oversight efforts in the crypto industry.
Federal Reserve Chair Jerome Powell, who is also the U.S. Crypto Asset Holders’ representative, assured Congress that he has ‘no intention of banning cryptocurrencies’. He does however see a reason for stabilizing stablecoins, just like Janet Yellen, Treasury Secretary.
The rise in crypto prices came as Wall Street indices were under pressure. This suggested that there was a decoupling from stocks or other risk-sensitive assets. Digital coins fell along with stocks last week on the news that Evergrande, a Chinese real estate company could be in default or need of a bailout.
The market was further affected by more uncertainty last Friday when the Chinese government increased its crackdown on crypto mining and outlawed trading in all cryptocurrencies.
Matthew Hougan, Chief Investment Officer at Bitwise, stated that crypto assets are rallying because of regulation. “We should all get used to this sentence, because you will hear it often over the next year.
Hougan believes Powell’s clarification and reports that Biden is seeking to regulate stablecoins, but not ban them, have’saved the market’s greatest fears about regulatory overreach’
Hougan stated that these fears have held back a market that would otherwise be very strong. Hougan stated that Cryptoto is experiencing a lot of tailwinds: DeFi’s growth, exploding interest NFTs and Web 3.0’s rise, as well as institutional investors’ entry, and a surge in venture capital investment.
Despite the rapid growth of crypto, institutional investors in the United States as well as ordinary Americans continue to search for safer ways to invest in cryptocurrencies.
Bakkt President Adam White stated to Yahoo Finance that crypto betting for institutional investors involves ‘having exposure’ to assets such as bitcoin. White said that financial offerings such as regulated custody for crypto assets or futures can help institutions ease into the sector in an environment that is familiar and secure.
The ETF factor
An ETF Bitcoin provides even more access to cryptocurrencies, mainly by strengthening the connections between them and the U.S. financial system.
It could also send BTC during another bullish move. According to Gabor Gurbacs (VanEck’s Director for Digital Asset Strategy), there are many benefits to a crypto sector fund.
Gurbacs, whose team has been working on ETFs since 2005, stated that ‘you basically get the benefits from the US capital markets which are currently unavailable for Bitcoin and other digital assets’.
He said that crypto ETFs offer better price transparency, better holdings transparency and straightforward tax documents. They also provide more liquidity and protections for investors.
The SEC is currently reviewing numerous Bitcoin ETF proposals. Many of their approvals were delayed until the end of 2018.