Amidst another trying year in the cryptocurrency space, the likes of Bitcoin, Ethereum and other popular alt-coins have had more than a few storms to weather of late, but after some dramatic peaks and troughs in price since the global Covid-19 pandemic, the Russian invasion of Ukraine and scandals within the crypto space, things finally seem to have stabilised.
Despite the volatility cryptocurrencies are known for – and which has led many investors to make some impressive returns since their inception back in 2009 – it seems that Bitcoin is now holding firm, with other leading digital assets following suit. As a result, trading platforms like Ethereum Code UK are reporting a climb in the number of new sign-ups as amateur investors start to regain confidence and become willing to dip their toes in the water once more.
But whilst this uncharacteristic has left some investors breathing a sigh of relief, for others, it’s a disappointing performance, and a far cry from the sky-high prices experts were predicting they would climb to not so long ago.
For the latter, though, good news could finally be on the horizon, because according to a key industry expert, Bitcoin’s price could be about to skyrocket. Nigel Green, CEO of one of the world’s largest independent financial advisory, asset management and fintech organisations deVere, believes that its recovery could come sooner than we think – and it all hinges on the US Securities and Exchange Commission (SEC)’s next move.
The SEC – the US’s financial regulator – is thought to be considering the approval of spot Bitcoin Exchange-Traded Funds (ETFs), and Green believes that in light of recent unconfirmed media reports, it’s likely that this will go ahead. If it does, then a vast number of new applications from major asset managers could be about to flood the federal register, sparking the surge in Bitcoin prices many of us have been waiting for.
“Should the SEC approve these filings, I expect the Bitcoin price will skyrocket for four main reasons,” says Green.
“First, a Bitcoin ETF allows investors to gain exposure to Bitcoin without directly owning or trading the cryptocurrency. Such increased accessibility for both can lead to a larger pool of potential investors entering the market, driving up demand for Bitcoin.
“Second, the introduction of a Bitcoin ETF will undoubtedly attract institutional investors who have strict regulatory requirements and risk management policies. They’ll bring with them capital, expertise and clout.
“Third, ETFs are traded on established stock exchanges, providing liquidity and ease of trading. This liquidity will attract more traders and increase market efficiency, reducing price volatility. As such, increased liquidity and market efficiency can positively impact the price of Bitcoin and other cryptocurrencies.
“And fourth, a Bitcoin ETF will generate significant mainstream attention and media coverage which will drive up demand and prices in the crypto market.”
Spot ETFs work by investing directly into underlying assets like stocks or bonds at what is known as the ‘spot price’ – in other words, the current market price – with a view to matching the performance of an asset class or index by holding a portfolio of the securities it comprises.
“Although not confirmed, of course, I do believe approval at some stage – and maybe sooner rather than later – is almost inevitable,” says Green, and if he’s right, then we could be about to see the most stellar performance from Bitcoin yet.
As we’ve seen historically, when Bitcoin performs well, other major alt coins like Ethereum tend not to be far behind it, so the approval could give the wider crypto market the boost it has been so sorely in need of of late. And investors who have taken advantage of the much lower than usual prices over the past three years could find themselves in a great position should they choose to sell as prices peak.
Many, of course, will continue to play the long game regardless, and hold firm on their investments whilst keeping the longer term potential in mind. And others will take this recent prediction as good reason to buy up stocks of Bitcoin, Ethereum and the like now, which with many amateur investors continuing to sell up and back out of the market, is still a well timed move on many levels.
Disclaimer: Investing money carries risk, do so at your own risk and we advise people to never invest more money than they can afford to lose and to seek professional advice before doing so.
