Although cryptocurrency appeared to be on the precipice of making even further steps into mainstream finance a couple of years ago, 2022 saw several price corrections and a stagnation of mainstream retail interest. Such is the volatile nature of the cryptocurrency markets, that prices can rise and fall dramatically. Still, the underlying belief is that the market is becoming increasingly relevant and could be on the brink of another bull run. While the future isn’t certain, there are often a number of catalysts that can drive extreme, positive price action. For those in the industry, there seems to be a divide on whether an ETF will send the price of prominent tokens into the stratosphere or whether there’ll be a sharp “sell the event” style price action that drags the total market cap down.
Other Potential Catalysts To Consider
An ETF on its own is undeniably positive in the long run, but for a market boom to occur, a number of other factors must allow it to flourish. A strong overall economic situation in the broader market is essential; this includes strong global currencies, projected economic growth, and stock market strength. In addition, there needs to be retail interest again, as we saw in 2021. Much of this was driven by stimulus checks and significant exposure in the space from prominent global figures like Elon Musk and other billionaire investors who admitted to investing in cryptocurrency throughout the last bull run.
Dogecoin experienced colossal price action as a result of Musk and his tweets. But as this cooled off, and his tweets began to have less of an impact, investors became bored, with many losing money due to the extreme highs and loans of the dog-based memecoin. Narratives that could coincide with an ETF include AI narratives, gaming tokens, and cryptocurrency gambling platforms. Cryptocurrency casinos, especially Bitcoin ones, are beginning to pulsate as casino gamblers swarm to witness their security and convenience advances compared to real money casinos. The SEC in America holds the keys to whether an ETF will be accepted. As Bitcoin casinos in the USA continue to bring these gambling platforms into the foreground, it could act as a helpful aid to drive the price up alongside potential ETF price action.
A Perfect Recipe?
An amalgamation and crossover between these sections could bolster retail involvement, open the wider public eyes to the potential of blockchain technology, and ultimately lead to more significant investment, which drives the price up. Irrespective of whether the ETF becomes a short-term “sell the news” event, it’s difficult to find anyone who believes the involvement of some of the most prominent asset management companies in the United States is bad for blockchain and cryptocurrency technology. One aspect other investors may overlook while all of this is being discussed is the Bitcoin halving next year, which has historically caused positive price action.
Blackrock has now filed for an Ethereum ETF to compound their current Bitcoin application. So, there’s clearly a strong belief that a Bitcoin ETF could be approved imminently. Whether it is or not is down to Gary Gensler and the SEC, but with increasing pressure and a number of other colossal asset management companies also putting their foot on the gas to have their Bitcoin ETF approved, it explains why the positive sentiment in the cryptocurrency space is so strong at the moment.
Final Thoughts
Fidelity, Grayscale, Ark, and Invesco & Galaxy have all joined the queue, also aiming for approval, and it’s no exaggeration to say that if they’re all approved, there could be an influx of trillions of dollars into the cryptocurrency market. Sell the news events aren’t a new concept; they have existed in the stock market, and it is a rather tiresome phrase for those with a vested interest in the sector.
However, the sheer magnitude and volume of capital that could flow in with accepting just one of these ETFs could make the idea of a sell-the-news event redundant. While there might be an initial selloff or possible price stagnation, the emergence of trillion-dollar asset management companies supplying a direct, effectively managed bridge for their high-net-worth retail and institutional clients to invest in Bitcoin has all the hallmarks of a potential bull-run catalyst.
While nobody can write off the potential of an ETF as a sell-the-news event, especially if it is coupled with negative external factors like a stock market correction or negative global economic outlook, most analysts, traders, and investors believe that an ETF represents serious positive in the medium to long term. Blackrock, Fidelity, and Ark all applying for Bitcoin ETFs may be vital to future growth, but it also shows the potential the assets have with such strong backing from prominent names in the industry. If we were to have our final say, we’d say regardless of what happens within the days or weeks of an ETF being approved, the long-term sentiment and outlook seem positive.
