Since its launch back in 2009, Bitcoin has been a somewhat divisive asset, as while some are convinced that it represents the future of finance, others believe that it is altogether too volatile to ever be a reliable investment. However, over the past few years, things have been gradually changing, and BTC has begun enjoying much higher engagement rates from investors. Even during the days of the 2022 bear market, many traders remained committed to including digital gold into their list of holdings or acquiring a more significant number of coins in order to boost overall value.
Since the beginning of 2023, prices have gradually been ascending, and the market is becoming more stable. However, regulatory pressures remained strong, so anyone looking for considerable growth felt let down that the Bitcoin price couldn’t gain momentum and record an even more considerable price increase so far. The fact that BTC didn’t consistently surpass the $30k level was a clear indicator that the market is still volatile and recovering.
Early 2024 approval
Bitcoin ETFs have been discussed at length recently, as an introduction into exchange-traded funds would be the first meaningful sign that digital finance has a place in traditional markets. While many members of the BTC community have been waiting for this announcement for quite some time, others have been more reticent, given the fact that the process wouldn’t be exactly decentralized.
The fact that the investors wouldn’t be in complete control of their assets is a negative standpoint for many since the need for intermediaries has long been considered a negative aspect of classic financial services. The possibility of censorship is also a problem. However, it seems like there’s no reason to be worried at the moment since there will still be some time until regulators reach a unanimous decision. Initially expected for August 13th, some investors expected the SEC to release an official statement on the 11th, considering that the 13th was on a Sunday.
However, others were quick to say that it’s unlikely there will be an official ruling on the 13th or even in the near future. It seems now that these predictions were much closer to the truth, as the deadline for BTC ETFs approvals has been delayed to early 2024. There’s a 240-day window available for the Securities and Exchange Commission, so companies could wait until the following spring to hear the final ruling.
Business involvement
While cryptocurrencies were, in the beginning, solely the domain of the tech-savvy that were even aware of the presence of digital coins in the first place, they are now well-known to a plethora of investors as well, including those operating in the retail sector. On June 16th, BlackRock, the largest asset management company in the world, applied for spot Bitcoin ETFs. This created considerable interest among investors, including those that don’t operate within the cryptocurrency environment.
The company later added an agreement for surveillance-sharing, which might lead the Sec to take a mellower stance on accepting the application. However, it’s important to remember that the Commission has never before approved an ETF proposal from anywhere in the United States. Investment vehicles tied to Bitcoin futures were only accepted in October 2021, relatively late, given that the market had been active for so long by that point.
The nature of the ETFs is likely to cause friction as well, considering that it would enable businesses to invest in digital gold without the need for an exchange. Spot Bitcoin ETFs involve holding Bitcoin in a fund, which in return allows the creation of more direct investments. So far, the process involved back-and-forth negotiations, and these are likely to continue for the foreseeable future. However, the good news is that investors have so far proved to be quite cooperative.
Analysts have estimated that a concise ruling will only be possible if both sides are open to dialogue and willing to make concessions. While the SEC will have to be more open-minded towards the introduction of the blockchain and digital finance, the crypto side must also be prepared to become compliant with the type of regulations that will allow it to operate within traditional finance areas undisturbed.
Political support
Since the beginning of the year, when discussions surrounding the regulations became gradually more visible, the intersection of politics and cryptocurrencies has become more apparent. Issues of Bitcoin’s legitimacy and actual value have become increasingly common over the past few years as more and more investors are joining the ranks and adding digital coins to their portfolios. It soon became apparent politicians are pretty divided on the topic, and while some hold a favorable view, others are staunchly against any cryptocurrency, including those that are relatively stable and safe such as Bitcoin.
According to researchers, the lack of bipartisan support for cryptocurrencies is likely to make the United States a much less attractive destination for businesses and vendors. It could also make it more challenging to create a framework for the regulations and rights the cyber asset market has. However, others believe that the situation is more nuanced than that, considering that the technology powering cryptocurrencies is based on the decentralization of classical systems and the financial empowerment of the general public.
According to this view on the subject, it is not so much about crypto itself but about the ability to build a fairer system for everybody, one that is also more efficient and transparent. According to a February survey, democrats and independents both have an equal crypto adoption rate of 22%, while republicans are a little lower, at 18%. Still, the fact that the figures are quite close indicates that digital money can transcend political barriers and improve lives for everyone. That’s why, at a state level, both blue and red constituencies have made meaningful progress towards developing workable frameworks for digital money.
Although the market is still changing and evolving, it’s clear that Bitcoin has made realistic progress. Although the price is still fluctuating, it’s plain to see that investors are convinced of the market’s potential to develop even further.
