Bitcoin ETF To Capitalize on Falling Stock Prices?
Bitcoin (BTC), Exchange Traded Fund (ETF)–Yesterday EWN reported on a development by JPMorgan analysts over their prediction of an inevitable U.S. recession lingering on the horizon. According to the report, JPMorgan is predicting a 60 percent chance of recession occurring by the year 2020, with that number climbing further to 80 percent in the next three years. While numerous economists have echoed the bank’s findings that a widespread market recession is likely to hit the states within the next several years, several analysts in the industry of cryptocurrency were quick to point out that such a catastrophe could prove to be beneficial for cryptocurrency.
On Oct. 24, the U.S. stock market took a decidedly bullish turn with widespread Wall Street selloff, leading to subsequent fall in Asian markets upon their opening bell. As more investors see the writing on the wall that is an overextended U.S. stock market, the dampening volatility of cryptocurrency is looking more and more like an advantageous investment. At the very least, cryptocurrency provides a global avenue for investment that could provide investor’s refuge as the traditional market ramps up in volatility and instability.
Look no further than the rise of stablecoins as indication that investors may find interest in cryptocurrency and cryptocurrency alternatives. While Bitcoin is hitting a near-low in price volatility following months of price depression, stablecoins are cropping up to fill the void of 2017’s ERC-20 backed ICO project. Rather than attempting to sell investors on the novelty of a coin or the price outlook for a technology that has yet to grow past infancy, stablecoins provide a pegged value for investors that offers some level of security relative to the general crypto market. While stablecoins lack to the full decentralization of a traditional cryptocurrency (having to peg their value to an extrinsic source), they also provide a more obvious pathway for use in day to day commerce, with the average adopter comfortable using the coins for actual transactions without the fear of the price swinging wildly over the course of a week or month.
However, the promise of a Bitcoin Exchange-Traded Fund could also provide a catalyst for the crypto markets, in particular as stocks inch their way towards what appears to be another U.S. recession. While the U.S. Securities and Exchange Commission (SEC) has yet to finalize a ruling on Bitcoin ETFs, many within and outside of the industry believe it is only a matter of time until investors are able to trade using the product.
Institutional investing, particularly in relation to the crypto markets, has become a buzzword that bulls like to point to as indication of a coming price boom. It remains to be seen just how Wall Street responds to the opportunity of investing in cryptocurrency through a more regulated portal–as opposed to the largely lawless landscape of the current crypto marketplace. The passage of a BTC ETF, in conjunction with slipping U.S. markets and uncertain stock investors, could be the type of fortuitous timing that would not only re-invigorate the valuation of cryptocurrency’s market cap after ten months of price slippage, but also drive substantial fintech interest into the field as a viable technology.