Is crypto resurging? Some trends indicate so, but don’t jump the gun yet

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After an unremarkable, rather forgetful 2022, cryptocurrencies seem to be rearing up again. Bitcoin, having inched up 20.9% over the last week, is currently trading at $30,000, making a sharp recovery from the $16,000-mark it had hit at the start of the year. Ethereum, which is also trading at $1,908, has jumped by 16% in the last 7 days. 

In what can be seen as a ray of hope amidst the bleak jungle of endless regulatory crackdown on prominent crypto exchanges like Binance and Coinbase, Fed chair Jerome Powell referred to stablecoins as a “form of money”. While this lends some credence to the battered crypto, is it on the cusp of a comeback? 

Institutional interest

Recently, BlackRock applied before the US regulator to start a Bitcoin Exchange Traded Fund (ETF). This would mean that bitcoin would serve as the underlying asset, defining the returns and direction of this fund. This confidence in bitcoin, reposed by the world’s largest asset manager with over $9.5 trillion in assets under its belt, meant a fresh breath of life for the cryptocurrency. 

Per Rajagopal Menon, Vice President, WazirX, “”After months of gloom and doom, the recent crypto bounce has brought a renewed sense of optimism to the market. Bitcoin surged for a third consecutive day, fueled by the news of spot BTC ETF applications by prominent asset management firms such as Deutsche Bank, BlackRock, Fidelity, Citadel, Schwab and WisdomTree”. 

“This interest from institutional players suggests that a wall of institutional money may pour into the crypto market. Ether also experienced a similar surge, while other major cryptocurrencies like ADA, MATIC, and DOGE enjoyed substantial gains as well. These developments signal a growing confidence in the crypto space and its potential for further growth and adoption”, he further noted. 

While there exist Bitcoin future ETFs, the SEC is yet to say yes to any spot Bitcoin ETFs. Spot prices refers to the immediate, current market price of a commodity, meant for immediate buying and selling. Whereas future prices are contractually pre-determined by both parties. Here, the transactions and delivery are slated for a later time

Earlier too, SEC had rejected similar applications made by fund managers like VanEck, Bitwise and more, citing them as unsafe for retail investors. But the filing has certainly pushed the market into positive action

India still cold to cryptos However, closer home, Indian regulations remain frigid to cryptocurrency. Trading volumes have significantly dipped, and Indian crypto exchanges are branching out into other ventures to earn. Most recently, CoinSwitch announced that it is launching a stock trading platform. Its competitor CoinDCX is also wading deeper into DeFi. Moreover, since the government imposed 30% tax on profits, alongside 1% TDS, on virtual digital assets, which includes cryptocurrencies, crypto traders have moved away from India. 

Rahul Pagidipati, CEO, ZebPay, an Indian crypto exchange, says he is bullish on bitcoin, irrespective of its short-term movements, because, as per him, “Bitcoin is a fundamentally robust asset with incredible economic potential”. 

“With notable institutional investors now being involved in Bitcoin ETFs, it is a great sign for the industry. Novice investors might find crypto ETFs to be a good investment option as they can rely on analysts to handle the learning curve associated with crypto. Also, by being low-cost, diversified, and not requiring an in-depth understanding of crypto self-custody, ETFs provide a simpler means of gaining exposure to the crypto market”, he further highlighted.