Will the current cryptocurrency rally ever end? Investors might be forgiven for thinking that this will not be the case on Wednesday, as prices for the leading asset in this class Bitcoin (BTC 5.83%)and a large amount of altcoins continued to trade well in positive territory.
In addition to Bitcoin’s 6% rise in the last 24 hours, there are also the much-maligned meme cryptos Dogecoin (DOGE 5.11%) And Shiba Inu (SHIB 4.32%) rose by 4.9% and 5.6%, respectively. Don’t be left behind, Algorand (SOMETHING 8.73%) rose by more than 11% and LidoDAO (I DO 3.63%) exceeded gravity by 5.5%.
The crypto spot ETF saga continues
There was no significant news affecting the crypto market that day and when this happens in the middle of a rally, the rally tends to extend. A new development to watch as it ties into a big reason for the market’s sunny bullish move these days is a regulatory announcement regarding spot crypto ETFs that was announced on Hump Day.
On Wednesday, the U.S. Securities and Exchange Commission said it was delaying a company called Hashdex’s decision to convert its Bitcoin futures exchange-traded fund (ETF) into a spot ETF.
The latter instruments are currently a hot topic as they would allow companies to invest directly in cryptocurrencies. Currently, they are restricted from doing so and can therefore only do their best to mimic crypto price movements using various methods. Spot crypto ETFs would be attractive to many investors who want to avoid the significant hassle often associated with owning crypto itself.
Currently, a group of financial services firms are racing to list spot crypto ETFs on exchanges. Some are conversions, like Hashdex, while others are newly formed securities. An example of the latter is Grayscale Investment’s proposal ether Vehicle, the Grayscale Ethereum Futures Trust. On Wednesday, the SEC announced that it is also postponing its decision on the release of this ETF.
Don’t worry about inflation
A postponement is not a “no,” and the SEC’s moves regarding Hashdex and Grayscale keep spot crypto ETFs alive as a water cooler conversation and topic of discussion in influential crypto forums online. They also remind us that there are well-funded, ambitious companies pushing for such assets to finally be approved.
Additionally, investors continue to be encouraged by the October Consumer Price Index (CPI) data released by the government’s Labor Department last Friday. This suggested that inflation was cooling more than economists expected, leading experts and investors to believe that this will deter the Federal Reserve from raising interest rates (as has been the norm in recent years).
Equal interest rates – or perhaps even lower if inflation continues to ease – will benefit cryptocurrencies and related assets. That’s because investors tend to take on more risk when they feel that competing “safe” assets (like the U.S. government’s Treasury securities) will no longer pay out.
Eric Volkman has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Lido DAO. The Motley Fool has a disclosure policy.
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