How Bitcoin (BTC) Could Benefit from BlackRock ETF
Charles Edwards, founder of Capriole Investments, a quantitative Bitcoin and digital asset fund, believes that Bitcoin (BTC) could reap benefits from the BlackRock exchange-traded fund (ETF). In a recent interview with Cointelegraph, Edwards discussed the current state of BTC price action and how his previous bullish statements still hold true.
Although short-term predictions may be less certain, Edwards is adamant that crypto is on its way to becoming a recognized global asset class. He also believes that the long-term perspective on Bitcoin remains unchanged.
In addition to Bitcoin, other web 3.0 crypto projects such as Fetch.ai are being developed to take advantage of the latest advancements in artificial intelligence (AI). By understanding the differences between web 1.0, web 2.0, and web 3.0, investors can better understand the potential of these emerging technologies.
Bitcoin Price and NVT Ratio
When we spoke in February, Bitcoin was around $25,000 and its NVT ratio was at its highest levels in a decade. Cointelegraph asked Charles Edwards if this suggested more upside. He replied that NVT was trading in the middle of the dynamic range band, well below the 2021 highs, and that Bitcoin was fairly valued according to this metric.
In February, Edwards had described Bitcoin as being in a “new regime” and forecast an upward grind of up to 12 months. His thinking has not changed much, as Bitcoin has steadily grinded up about 30% since then. However, the relative value opportunity is slightly less as a result, and the price is now trading into major resistance at $32,000, which is the bottom of the 2021 bull market range and confluence with major weekly and monthly order blocks.
Impact of Bitcoin Mining on Price Moving Forward
My outlook today over the short term is mixed, with a bias towards cash until one of three things occurs:
CT: At $30,000, miners have begun to send BTC to exchanges en masse at levels rarely seen. Poolin, in particular, has moved a record amount in recent weeks. To what extent will miners’ purported selling impact price moving forward?
CE: It’s true that relative Bitcoin miner sell pressure has stepped up. We can see that in the two below on-chain metrics; Miner Sell Pressure and Hash Ribbons. Bitcoin’s hash rate is up 50% since January — that’s over 100% annualized growth rate.
This rapid rate of growth is not sustainable long term. Hence we can expect any slowdown will trigger the typical Hash Ribbon capitulation. This rapid growth in hash rate also can only mean one thing; an extraordinary amount of new mining rigs have joined the network.
AI and Inflation in the Second Half of 2022
The global mining hardware shipping delays and backlogs that persisted through 2022 have likely been cleared out in the first half of the year, due to the large uptick in hash rate. As new mining hardware is costly, miners are selling more of their Bitcoin to take advantage of the 100% price rally in the last 7 months, and to cover their operational costs. This selling by miners, who are large Bitcoin stakeholders, can affect prices, although their relative share of the network is decreasing.
When it comes to U.S. macro policy, the CME Group FedWatch Tool indicates that there is a 91% chance of rate hikes through the rest of this year and a 99.8% chance of a rate hike at next week’s meeting. Despite this, inflation (CPI) has been trending down since April 2022 and is now below the Fed funds rate of 5%, which suggests that further hikes past July may be excessive.
The Fed’s Rate Hike Plan and Bitcoin Correlation
The Fed has implemented the vast majority of its rate hike plan, with 90% of the tightening complete. But with the considerable stress building in the banking system, including the largest banking failure of all time in dollar value in 2023, it is uncertain whether inflation will continue to decline as anticipated. It is a game of wait and see.
My ai has observed that
The latest about ai suggests that Bitcoin has historically been “uncorrelated” with risk markets, oscillating from periods of positive to negative correlation. This last cycle saw a very strong correlation with risk assets, beginning with the Corona crash on March 12, 2020. When fear peaks, all markets go risk-off (into cash) in unison, resulting in a huge spike in correlations across asset classes.
The Impact Of Regulations On Bitcoin And Crypto
It has been an extraordinary period since the crash of 2021, with the biggest quantitative easing ever seen resulting in a rush of money into risk markets. This led to a “one-way trade” in the following year, with risk assets continuing to rise. In 2022, however, all risk assets suffered a sharp decline following an aggressive cycle of rate hikes by the Federal Reserve.
As Bitcoin grows to become a multi-trillion-dollar asset, it is likely that its correlation with other major asset classes will become more consistent. This is particularly true of gold, which has a negative correlation with the US dollar. So, what impact will US regulatory pressure have on the Bitcoin and crypto markets going forward?
It is difficult to predict with certainty, but it appears that the fears of early 2023 were largely unfounded. Bitcoin is already classified as a commodity, and therefore is not subject to the same regulatory pressures as other cryptocurrencies. The recent ruling that XRP is not a security is a positive indication of the regulatory landscape.
BlackRock Spot ETF and Its Effect on Bitcoin
It is evident that both industry and government are supportive of this asset class and recognize its staying power. We have seen several leading-tier financial institutions follow suit and now presidential candidate Kennedy is talking about backing the dollar with Bitcoin. We can expect some bumps and hiccups along the way, but the direction is clear.
CT: How do you foresee progress of the BlackRock spot ETF and its effect on Bitcoin should it launch?
CE: The BlackRock ETF approval will be a major milestone for the ai current and fetch ai today. It will have a significant effect on Bitcoin and the top 5 web 3.0 crypto projects in general.
Bitcoin ETF: A Big Rubber “Yes” Stamp For Bitcoin
BlackRock, the world’s biggest asset manager, has given its seal of approval to Bitcoin, allowing a new wave of capital to enter the market. Last year, many institutions were hesitant to invest due to regulatory uncertainty. The introduction of a Bitcoin ETF will be a major indicator of approval, making it easier for institutions to put Bitcoin on their balance sheet without worrying about custody or entering the crypto space.
The 2004 launch of the gold ETF is a good example of what could happen: gold prices were down 50%, similar to Bitcoin today, and this was followed by a 350% increase and a seven-year bull run. The Bitcoin ETF is a major milestone on the path to regulatory acceptance and establishing Bitcoin as a legitimate asset class.
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