It was not that long ago that Bitcoin values were approaching the $20,000 level, but asymptotic growth, spurred by traditional investors rushing into the cryptocurrency space, was not sustainable. With the crypto “asset bubble” story now a part of past history, analysts are musing as to what could drive Bitcoin prices back to that high level again. BTC prices have been range-bound for some time between $6,000 and $7,000, while equity values collapsed during October. Is there anything on the horizon that could serve as a catalyst for dramatic growth once again?
One analyst, Garret Keirns, expresses the general concern that crypto investors are presently a bit gun shy, still licking their wounds from earlier in the year: “People are afraid to lose money, particularly the Coinbase local crowd who bought cryptos in at $10k+. Also, to the slumping cryptocurrency market, folks are starting to see their 401k and equity portfolios losing steam.” While Bitcoin has actually received support from equity investors searching for a “safe haven”, the extra boost has been muted.
Many industry pundits have also spoken that appealing to institutional investors is of the utmost importance. In a previous post, we noted that Coinbase officials had claimed that, “If only the industry could improve its infrastructure and diversified offerings, then it could possibly unlock $10 billion of institutional investor money sitting on the sideline.” Meeting the standards required in this arena will take time, which could move valuations north, but on a more gradual basis.
What might supercharge an immediate spike? Thoughts in this vein return to the SEC and whether or not they will approve the formation of a BTC Exchange-Traded Fund, or ETF for short. As we also noted recently: “The U.S. regulatory kingpin has already dismissed nine previous attempts, due to concerns over transparency and potential market manipulation. SEC Commissioner Hester Peirce is on the record as being in favor of a BTC ETF, having stated that, “Bitcoin as an asset is mature enough to be worthy of trading in U.S. markets.””
Perhaps Commissioner Peirce pushed a few of the right buttons, because the word on the street is that the SEC is once again reviewing the BTC ETF applications and will publish its comments on November 5th. Oliver Isaacs, described as a Blockchain investor, influencer and advisor, sees a positive move in this direction could produce a sea change in the industry: “The approval of a BTC ETF will open floodgates for new investors to pour billions of dollars into cryptocurrencies with the same ease in which they invest in stocks and other mainstream asset classes.”
Will investors go back to the well again, after being burned once? Time will tell, but the formation of a single ETF could drive new buying decisions from the public at large, as well as from investors that are loath to deal directly with an exchange or OTC broker. Will values race past $20,000? Remember that gains on paper mean nothing, until they become cash in the bank.