“During the bear market between 2013 and ‘17 it was like “Bitcoin is for criminals,” now the largest asset manager on earth says it’s part of a ‘flight to quality’ trade; it’s truly remarkable.”
This sentiment was well articulated by Galaxy’s Head of Firmwide Research, Alex Thorn, who made these remarks during a conversation with Peter McCormack on the latter’s podcast, “What Bitcoin Did.”
Regarding the recent bull run, the Galaxy Research head said that the anticipation around spot Bitcoin [BTC] exchange-traded funds (ETFs) should also apply to the Grayscale ruling in August.
Thorn also highlighted how the Securities and Exchange Commission (SEC) had been reluctant to comment on the S1 process. With the applicants submitting amendments to their S1 applications, the anticipation around ETF approval grew.
However, the concerns of the SEC that these amendments addressed were “benign.” They included additional risk disclosures, lack of corporate governance behind open-source software, and risks of illicit activities.
None of these concerns were particularly grave. So, it is difficult to understand why the SEC didn’t comment on them earlier.
Nonetheless, it is a positive development.
Thorn took as the changing behavior of the SEC towards crypto, echoing a view shared earlier by ARK Invest CEO Cathie Wood. She had also said that the agency would approve multiple spot Bitcoin ETF applications at once.
There is a general understanding in the market that this is indeed true of the SEC.
J.P. Morgan analysts released a report last week, claiming that the “crypto rally looks overdone.” The analysts listed down their reasons for the findings.
Firstly, capital can merely shift from existing Bitcoin products such as the futures ETFs and public Bitcoin mining companies into spot ETFs. Besides, existing spot Bitcoin ETFs in Canada and Europe have garnered little interest from investors since their launch.
Secondly, the recent legal victories for Grayscale and Ripple [XRP] don’t necessarily translate into the easing of crypto regulations in the U.S.
Thirdly, the investors have likely overestimated the optimism around the Bitcoin halving.
The institutionalization post the union of TradFi and DeFi violates the underlying principles of cryptocurrency, such as decentralization and trustlessness. But it could lead to a wider participation in crypto and possibly a bull run, Thorn said. He added,
“It’s very reasonable for Bitcoiners to be suspicious of the institutionalization of Bitcoin.”
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