BlackRock ETF: A “big rubber yes stamp” for Bitcoin, says Charles Edwards

BlackRock ETF: A "big rubber yes stamp" for Bitcoin, says Charles Edwards

The Growing Potential of Bitcoin in the Blockchain Industry

Bitcoin (BTC) has been gaining traction in recent years and is poised for further growth, thanks to developments in the blockchain industry. Charles Edwards, a renowned investor and analyst, believes that Bitcoin stands to benefit significantly from the BlackRock exchange-traded fund (ETF) and the recognition of cryptocurrencies as a global asset class.

Bitcoin’s Current State and Future Prospects

In a recent interview with Cointelegraph, Edwards, the founder of Capriole Investments, a quantitative Bitcoin and digital asset fund, discusses the current state of BTC price action and its long-term prospects. He acknowledges that while Bitcoin may be less predictable in the short term, the overarching narrative of crypto becoming a recognized global asset class remains intact.

The Bitcoin NVT ratio, which measures the network value to transaction ratio, is currently trading at a normal level. It suggests that Bitcoin is fairly valued according to this metric alone. Edwards believes that Bitcoin’s price will continue to rise if it clears the $32,000 resistance level on daily and weekly timeframes or if on-chain fundamentals show signs of growth.

The Impact of Miners’ Selling on Bitcoin’s Price

One factor that could potentially affect Bitcoin’s price is the selling pressure from miners. Edwards notes that miners have been sending BTC to exchanges en masse, indicating increased selling activity. However, he also points out that the relative share of miners in the network is diminishing, reducing the impact of their selling on prices.

The rapid growth in Bitcoin’s hash rate, which reflects the computational power of the network, suggests the addition of new mining rigs. This growth rate is not sustainable in the long term and may trigger a Hash Ribbon capitulation, leading to a slowdown in mining activities. Miners are selling more at higher prices to cover operational costs and take advantage of the recent price rally. While their selling activity can impact prices, Edwards believes that the overall risk factor has diminished.

U.S. Macro Policy and its Effect on Bitcoin

The U.S. Federal Reserve’s approach to inflation and interest rates is another factor that could influence Bitcoin’s future. Edwards highlights the market’s expectation of rate hikes throughout the year, despite inflation trending downward since April 2022. He believes that any net change in the Fed’s plan will likely be towards a pause, given the considerable stress in the banking system and the potential economic uncertainties ahead.

Bitcoin’s Correlation with Risk Assets and the U.S. Dollar

Bitcoin’s correlation with risk assets and its inverse correlation with the U.S. dollar have been declining recently. Edwards explains that Bitcoin historically oscillates between positive and negative correlations with risk markets. The strong correlation observed in the past year was due to the impact of the COVID-19 pandemic and the subsequent injection of liquidity into risk markets through quantitative easing.

As Bitcoin becomes a multi-trillion-dollar asset, Edwards expects it to be more interconnected with major asset classes. He predicts a consistent positive correlation with gold over the next decade, as gold has a highly negative correlation with the U.S. dollar.

The Impact of Regulatory Pressure on Bitcoin and Crypto Markets

The regulatory landscape is an important consideration for the future of Bitcoin and the broader crypto market. Edwards believes that the regulatory fears that dominated early 2023 have been exaggerated. Bitcoin has already been classified as a commodity, providing regulatory clarity. While there may be uncertainties regarding various altcoins, the legal outcome of XRP being deemed not a security is a positive development.

Furthermore, Edwards points out that leading-tier financial institutions, including BlackRock, have shown support for the crypto asset class. BlackRock’s decision to launch a Bitcoin ETF can be seen as a regulatory and financial industry green light, paving the way for increased institutional participation. The approval of a Bitcoin ETF would bring a new wave of capital into the market and make it easier for institutions to invest in Bitcoin without concerns about custody or entering the crypto space.

The Significance of the BlackRock Spot ETF for Bitcoin

The approval of the BlackRock spot ETF is expected to have a significant impact on the Bitcoin industry. BlackRock, as the largest asset manager in the world, carries significant influence. The approval of the ETF would signal regulatory acceptance and attract institutional investors who have been cautious due to regulatory uncertainties. Edwards draws a parallel with the launch of the gold ETF in 2004, which led to a massive bull run for gold. He believes that the Bitcoin ETF is another important milestone towards establishing Bitcoin as a serious asset class.

In conclusion, Bitcoin’s potential for growth in the blockchain industry remains strong. Factors such as the BlackRock ETF, regulatory developments, and the evolving macroeconomic landscape will play crucial roles in shaping Bitcoin’s future. While short-term price movements may be uncertain, the long-term narrative of Bitcoin becoming a recognized global asset class remains intact. As the industry continues to mature, Bitcoin’s correlation with other asset classes and its value proposition as a store of value are likely to strengthen, further solidifying its position in the blockchain industry.