Cryptocurrency markets, currently under the sway of macro and regulatory factors, see Bitcoin trading close to $29,167. Mao Shixing, co-founder and CEO of custodian Cobo, highlights a significant development – the application by traditional institutions for a Bitcoin Exchange-Traded Fund (ETF).
Shixing anticipates that traditional financial institutions will secure approval for cryptocurrency spot ETFs by Q1 of 2024. He expects the launch of one or two ETFs with substantial liquidity, which will reestablish compliant funding channels in North America. The approval of numerous ETFs could channel significant funds into major assets like Bitcoin and Ethereum from traditional asset allocations or risk-averse investors.
Interestingly, crypto markets have shown less reactivity to macroeconomic events, such as US central bank interest rate hikes and inflation and GDP data. Therefore, traders might interpret Bitcoin’s breach of the external Bollinger Bands as a sign of potential upside movement to around $30,000.
The Resurgence of DeFi
Decentralized finance (DeFi) projects flourished in 2020, reaching a high of $248.84 billion in total value locked. However, the sector lost its appeal amid the crypto winter. Boris Revsin, managing partner of Tribe Capital, an investment firm with over $1.6 billion in assets under management, believes that DeFi can reclaim its former glory with the development of more infrastructure in open markets outside the US, facilitating project creation. Revsin expects DeFi to experience a significant resurgence towards the end of this year or early next year.
Noteworthy Developments in the Crypto Space
Bitcoin’s flat trajectory seems to have factored in Wednesday’s Federal Reserve decision to raise the interest rate by 25 basis points. Venture capital firm a16z sold $7 million worth of MKR tokens as the price surged to near one-year highs. According to Boris Revsin of Tribe Capital, a major resurgence in DeFi looms on the horizon, propelled by infrastructure development. Elon Musk’s Twitter overhaul could potentially exert a significant impact on Dogecoin (DOGE) and the cryptocurrency market at large.
In conclusion, the crypto market eagerly awaits a potential spot Bitcoin ETF as a key catalyst. The expected approval of cryptocurrency spot ETFs for traditional financial institutions could significantly reshape the market. Moreover, the anticipated resurgence of DeFi and the potential impact of Elon Musk’s Twitter overhaul on the cryptocurrency market are developments worth monitoring.
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