Latest Business News
Bitcoin Rallies After BlackRock's Move Gives Confidence Boost to Crypto Industry
Optimism Takes Hold After BlackRock's Filing for a Spot Bitcoin ETF
Bitcoin had its second down week in a row, ending this week slightly negative at $26,355.04, but the cryptocurrency rallied after BlackRock, the world's largest asset manager, surprised investors by filing for a spot bitcoin ETF. Price reaction was initially muted, but Friday saw a 4% climb, offering a much-needed moment of relief for the crypto industry. Gustavo Schwenkler, an associate professor at the Leavey School of Business at Santa Clara University, believes the approval of an ETF could introduce a new use for crypto, uplifting prices and changing perception of what crypto is good for.
FOMO Out of the Market
Price action was tepid at the start of the week, and bitcoin briefly fell to a March low on Wednesday. According to Mark Connors, head of research at 3iQ, "the FOMO is completely out of the market... and we've seen some bitcoin dominance, there are a lot of headwinds". Connors also said that the market is revisiting recession-type concerns, and wallet traffic and exchange volumes reveal that it's a doubting Thomas market for the next buyer of bitcoin.
Continuing Regulatory Headwinds and Macroeconomic Concerns
The Federal Reserve's June meeting contributed to ongoing macroeconomic concerns, as Fed Chair Jay Powell stated there could be two more rate increases this year. Continuing SEC lawsuits against Coinbase and Binance are also weighing on investors, with some market analysts believing that returns are not attracting dollars. Yuya Hasegawa, crypto market analyst at Bitbank, suggested that the recent movement of bitcoin from miner wallets to exchange wallets is limiting the cryptocurrency's upward potential.
Miner Profitability and Bitcoin's Declining Price
Hasegawa also suggested that miners' profitability from bitcoin's block reward may be declining, which could be contributing to bitcoin's recent declines. Bitcoin's price and rising mining difficulty could be causing miners to offload their bitcoin holdings, thereby limiting bitcoin's upward potential.
The recent rally in bitcoin's price following BlackRock's filing for a spot bitcoin ETF highlights the growing interest in the cryptocurrency market. While optimism takes hold, concerns remain, such as fears of a potential market recession and regulatory headwinds. However, for new businesses looking to enter the crypto industry, these headwinds may offer opportunities for growth and innovation.
One such opportunity is addressing the declining profitability of bitcoin miners. As the block reward diminishes and mining difficulty increases, miners may be seeking alternative ways to generate revenue. New businesses could offer innovative solutions, such as providing hardware or software that allows miners to diversify their revenue streams. Additionally, new businesses could focus on educating and onboarding new investors as perception of what crypto is good for changes with the introduction of a potential ETF.
Furthermore, the recent SEC lawsuits against Coinbase and Binance could prompt the need for more secure and regulatory compliant platforms, presenting an opportunity for new businesses to fill the gap. Overall, while the crypto industry has its ups and downs, there are still ample opportunities for new businesses to enter and disrupt this rapidly growing market.
Article First Published at: https://www.cnbc.com/2023/06/17/bitcoin-gets-a-sliver-of-optimism-to-cap-an-otherwise-dismal-week-for-crypto.html