Corum/Getty Images)Getty Images
Satoshi Nakamoto, the legendary creator of the Bitcoin network, would now be “turning in his grave,” according to an expert who described how closely cryptocurrency analysts are monitoring the Federal Open Market Committee.
The 12-member FOMC held a policy meeting yesterday and is scheduled to announce the outcome of that event later this afternoon.
Cryptocurrency, initially advocated primarily by libertarians and technologists, has clearly gone mainstream.
“The fact that crypto analysts would watch what the de facto US central bank (the Fed's FOMC) is doing, which they believe will have a direct impact on BTC prices, is both wonderful and apocalyptic: wonderful, “because it shows how BTC (and, to a lesser extent, crypto) has been accepted as an asset class by the fiat world and is apocalyptic because such a correlation directly contradicts BTC’s libertarian and crypto-maximalist origins,” said Tim Enneking, Managing Director of Digital Capital Management.
Growing institutional commitment
Enneking made the statement shortly after the U.S. Securities and Exchange Commission approved applications for several exchange-traded funds (ETFs) that track spot Bitcoin prices, a development that many market watchers have been waiting for years.
Tyler and Cameron Winklevoss, two prominent entrepreneurs in the industry and co-founders of Gemini, submitted the first application for a spot Bitcoin ETF back in 2013.
While the SEC's recent decision to “green light” the existence of such funds has certainly made headlines, it is just part of a broader trend of financial institutions becoming increasingly involved in the industry.
Commenting on this situation, Joshua de Vos, Head of Research at CCData, said: “The digital assets sector is currently experiencing a period of increasing institutionalization.”
“Notably, there was significant absorption of GBTC (Grayscale Bitcoin Trust) holdings, an important development considering bankrupt companies like Celsius and FTX were among GBTC holders,” he noted. “These holders were already locked in prior to the recent conversion of the trust (GBTC) into an ETF.”
“In light of the recently approved spot Bitcoin ETFs, institutional Bitcoin products saw a notable 224% increase in average daily volume, rising to $2.19 billion as of January 26, underscoring the institutional attention that Bitcoin products are receiving have generated since their launch,” said de Vos, citing information from CCData.
Result of the FOMC meeting
Several analysts weighed in on the impact this month's policy meeting is expected to have on so-called risk assets, a broad category that includes cryptocurrencies, stocks, commodities and real estate.
“In the immediate case, the dovish FOMC language (as it is a foregone conclusion that interest rates remain unchanged) will benefit all risky asset classes, including BTC and crypto,” Enneking said.
“However, since BTC's own narrative (ETF approval, halving, four-year cycle, Level 2 filings, etc.) is so wildly optimistic, regardless of what the FOMC does, I don't think the accompanying language is much – and certainly not in the long term – impact on BTC prices,” he added, citing numerous headwinds.
Sam Callahan, senior analyst at Bitcoin financial services firm Swan Bitcoin, also commented on the impact of the aforementioned central bank meeting.
“If the Fed signals a shift toward less restrictive monetary policy during this FOMC meeting, such as cutting interest rates or slowing the pace of its balance sheet reduction, this will likely serve as a tailwind for Bitcoin price,” he predicted.
“Historically, Bitcoin performs well during times of looser monetary policy,” Callahan noted.
Disclosure: I own Bitcoin, Bitcoin Cash, Litecoin, Ether, EOS and SOL.
Follow me up Twitter or LinkedIn.
I am a financial writer and editor with extensive knowledge of asset markets and investment concepts. I have worked for financial institutions such as State Street, Moody's Analytics and Citizens Commercial Banking. Author of more than 1,000 publications, my work has appeared in outlets such as Fortune, Business Insider, Washington Post, CoinDesk, and Investopedia. I created all of the industrial finance training for a company with 300+ employees. I have presented at industry events around the world and given speeches on financial literacy for Mensa and Boston Rotaract. I currently own Bitcoin, Bitcoin Cash, Litecoin, Ether, EOS and SOL.
Read moreRead less
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers
Comments are closed.