Although cryptocurrency appeared to be on the precipice of making even further steps into mainstream finance a couple of years ago, 2022 saw several price corrections and a stagnation of mainstream retail interest. Such is the volatile nature of the cryptocurrency markets, that prices can rise and fall dramatically. Still, the underlying belief is that the market is becoming increasingly relevant and could be on the brink of another bull run. While the future isn’t certain, there are often a number of catalysts that can drive extreme, positive price action. For those in the industry, there seems to be a divide on whether an ETF will send the price of prominent tokens into the stratosphere or whether there’ll be a sharp “sell the event” style price action that drags the total market cap down.
Other Potential Catalysts To Consider
An ETF on its own is undeniably positive in the long run, but for a market boom to occur, a number of other factors must allow it to flourish. A strong overall economic situation in the broader market is essential; this includes strong global currencies, projected economic growth, and stock market strength. In addition, there needs to be retail interest again, as we saw in 2021. Much of this was driven by stimulus checks and significant exposure in the space from prominent global figures like Elon Musk and other billionaire investors who admitted to investing in cryptocurrency throughout the last bull run.
A Perfect Recipe?
Final Thoughts
Fidelity, Grayscale, Ark, and Invesco & Galaxy have all joined the queue, also aiming for approval, and it’s no exaggeration to say that if they’re all approved, there could be an influx of trillions of dollars into the cryptocurrency market. Sell the news events aren’t a new concept; they have existed in the stock market, and it is a rather tiresome phrase for those with a vested interest in the sector.
However, the sheer magnitude and volume of capital that could flow in with accepting just one of these ETFs could make the idea of a sell-the-news event redundant. While there might be an initial selloff or possible price stagnation, the emergence of trillion-dollar asset management companies supplying a direct, effectively managed bridge for their high-net-worth retail and institutional clients to invest in Bitcoin has all the hallmarks of a potential bull-run catalyst.
While nobody can write off the potential of an ETF as a sell-the-news event, especially if it is coupled with negative external factors like a stock market correction or negative global economic outlook, most analysts, traders, and investors believe that an ETF represents serious positive in the medium to long term. Blackrock, Fidelity, and Ark all applying for Bitcoin ETFs may be vital to future growth, but it also shows the potential the assets have with such strong backing from prominent names in the industry. If we were to have our final say, we’d say regardless of what happens within the days or weeks of an ETF being approved, the long-term sentiment and outlook seem positive.