Bitcoin (BTC) has bounced back into the $26,000s amid a wave of hype surrounding the cryptocurrency’s potential greater adoption by financial institutions.
Sparking the optimism is news that BlackRock, the world’s largest asset manager, may have a trick up its sleeve when it comes to securing permission from the US Securities and Exchange Commission (SEC) to set up the first US-based spot bitcoin Exchange Traded Fund (ETF).
According to reports in the crypto press, BlackRock’s spot bitcoin ETF application will come alongside a new so-called “surveillance-sharing agreement” designed to bolster spot market transparency and reduce the scope for market manipulation.
The SEC has so far refused various other spot bitcoin ETF application requests, frequently citing the fact that cryptocurrency exchanges like Binance and Coinbase where most spot trade takes place are unregulated.
According to the SEC, this increases the risk of market manipulation that could hurt investors in a spot bitcoin ETF.
According to BlackRock’s ETF application, Nasdaq will enter into a surveillance-sharing agreement with a bitcoin spot trading platform.
Nasdaq is the exchange that BlackRock have proposed launching the ETF on.
Bitcoin Rallies on Hope of New Wave of Institutional US Buying
A commonly cited barrier to the broader institutional adoption of cryptocurrencies like bitcoin in the US is the lack of regulated investment vehicles that give direct exposure to the underlying asset.
Institutional adoption refers to the general idea of asset managers starting to allocate a portion of their portfolios towards digital assets like bitcoin.
At present, institutions can purchase bitcoin future ETFs.
But surveys have show that many would be more interested in purchasing ETFs that give direct exposure to bitcoin (i.e. a spot ETF).
Surveys have also shown that a majority of institutional investors are highly interested on getting involved in crypto markets.
According to a survey conducted by Laser Digital, the digital assets division of Japanese banking giant Nomura, and cited by CoinDesk, 96% said they think crypto represents a diversification opportunity.
The survey of investment fund, hedge fund, pension fund and wealth management offices found that institutional investors were keen to invest as much as 5% of their wealth into crypto.
Should BlackRock’s spot ETF secure approval, this could open the gates to a flood of institutional investment into bitcoin.
That’s why traders have pushed the world’s largest cryptocurrency by market cap back into the mid-$26,000s.
Bitcoin is now more than 6% up from its sub-$25,000 multi-month lows hit earlier this week in wake of the hawkish Fed meeting.
Here’s What Needs to Happen for BTC Price to Hit New Yearly Highs
Bitcoin’s latest bounce from sub-$25,000 levels confirms that the 2023 uptrend remains intact (for now).
But bitcoin still faces significant technical hurdles that it will need to convincingly overcome if it is to get back to yearly highs, not to mention continued macro headwinds from the still hawkish Fed and an aggressive, anti-crypto SEC.
First up, bitcoin faces resistance from its 21-Day Moving Average at $26,600 and then the 50 and 100DMAs above that in the $27,200-300 area.
If it can get above here, then it will also need to overcome a downtrend from the yearly highs.
Only then will the door to a retest of yearly highs in the $31,000s have reopened.
That’s a lot of hurdles, suggesting the near-term outlook for bitcoin remains challenging.
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