This Market Won’t Be at a Discount for Long
Amanda Heckman|August 6, 2022
The glee from crypto skeptics and naysayers has been palpable this year.
But lost in the euphoria is a single cold hard fact…
Crypto isn’t going anywhere.
Like any asset that gets too hot to handle, crypto has come back down to earth… just like the stock market.
But there are signs that things are about to pick back up again.
In July, cash flowed into the market at a greater clip than in any other month in 2022. Institutions invested nearly $500 million into cryptos.
Institutional investors – which include hedge funds, corporate treasuries and asset managers – have made huge inroads into cryptocurrencies over the past two years. We watched that money drive the crypto market to a record-breaking $3 trillion market cap in 2021.
The crypto market has contracted along with stocks in 2022… but those investors haven’t gone away.
Coinbase reported in May that 75% of the $309 billion in trading volume it saw in the first quarter of 2022 came from institutional investors.
Demand for crypto is still strong… and buyers are taking advantage of low prices to fill their coffers at a discount.
In fact, after falling for much of the year, Bitcoin – the bellwether for the market – has leveled off in recent weeks, hanging out right around the $22K mark.
That discount may not last for long…
A Massive Deal
We learned this week that major investment management firm BlackRock has teamed up with Coinbase to make it easier for institutional investors to manage and trade Bitcoin.
“Our institutional clients are increasingly interested in gaining exposure to digital-asset markets,” Joseph Chalom, BlackRock’s global head of strategic ecosystem partnerships, said in a statement.
BlackRock’s move will help Wall Street’s traditional financial players get more deeply involved in crypto.
It also shows that sophisticated investors are getting more comfortable with the crypto market.
And a massive deal like this is just what crypto needs to prove its legitimacy and staying power.
We’ve said all along that the key to crypto’s future is smart regulation (don’t laugh).
[Regulation] will end a lot of the uncertainty around what is clearly becoming a major asset class… Much of the speculation surrounding crypto will be washed away, and it will finally be clear that Washington expects crypto to be around for the long term.
And right now, there are forces in motion to make sure crypto regulation makes sense – and is even, dare we say it, smart.
A new bipartisan proposal would hand the regulatory authority over Bitcoin and Ethereum to the Commodity Futures Trading Commission (CFTC).
The Stabenow-Boozman bill would be a win for the cryptocurrency industry. The CFTC is seen as a more industry-friendly regulator than the SEC. Plus, it’s a fraction of the size of the SEC, with a far smaller budget and far fewer employees.
The CFTC already oversees futures contracts for the two cryptos. And it’s the crypto industry’s preferred choice for regulation.
But that’s not the only bipartisan proposal in the works…
In June, Sens. Kirsten Gillibrand, D-N.Y., and Cynthia Lummis, R-Wyo., proposed a wide-ranging bill called the Responsible Financial Innovation Act. (Lummis is a big fan of Bitcoin.)
This bill proposes legal definitions of digital assets. It would require the IRS to adopt guidance on digital assets as a form of payment and charitable contributions. And importantly, it would draw a line between digital assets that are commodities and those that are securities, which has not been done as of yet.
After years of feet-dragging by Washington… this is yet another bullish sign for the market.
Regulation will pave the way for mainstream adoption and clear away the questions surrounding it.
This still-fledgling market isn’t going anywhere.
And as the market resets… we’ll have our eyes on three coins that will ride the next crypto wave. They have the potential to be bigger than Bitcoin… to disrupt trillion-dollar industries… and to radically improve our world. Get the details here.
Amanda Heckman|Editorial Director
Amanda Heckman is the editorial director of Manward Press. With unrivaled meticulousness, she has spent the past dozen or so years – give or take a few sabbaticals – sharpening Andy’s already razorlike wit. A classically trained musician and a skilled writer in her own right, Amanda takes an artistic approach to the complex world of investing. Her skill has led her to work with numerous bestselling authors, award-winning financial gurus and – lucky for us – the fine folks at Manward Press.