Bitcoin (BTC) Pulls Broader Market Upwards on Adoption and Fear of Inflation – Weekly Roundup

Bitcoin has just posted quite an impressive week.  From $47,000 to $55,000 USD, the top digital asset is firmly in bull territory, pulling the broader market upwards with it.  The following are a few events from the past week, aiding in this upwards trajectory.

ETF Anticipation

It is typically a widespread belief that the SEC will eventually approve a BTC based ETF.  Such products have thrived in Canada and like-minded nations.  Fueling recent talk of such a product are not only the various pending applications, but commentary from the SEC itself, indicating that it was more likely to approve a futures-based BTC ETF.

What this week did see was the SEC approve a new product titled the ‘Volt Crypto Industry Revolution and Tech ETF’.  The purpose of this is to provide investors with access/investment opportunities in companies which boast significant exposure to, and profit from, BTC.

While not the move many were hoping for, the approval of the Volt Equity ETF is being viewed by many as an indication of a growing comfort level in the SEC towards BTC – and a clear precursor to approving the long anticipated BTC ETF itself.

No Bans Expected

Fear can often outweigh or subdue the effects of positive industry developments.  If the former is removed however, crypto markets can move upwards quite quickly.  This past week boasted a perfect example of this, with SEC Chairman Gary Gensler indicating in a meeting with the House Committee on Financial Services that the regulator had neither the ability nor intent to ban cryptocurrencies.

With China recently reiterating its ban on crypto, these statements were crucial in allaying any fears that new entrants to the market may have had over a potential ban elsewhere.

Notably, this sentiment echoed a similar statement made the week prior by Federal Reserve Chairman Jerome Powell.

Hiding from Inflation

Perhaps above all, the recent surge in BTC (and the overall digital asset market) can be attributed to disconcerting numbers surrounding inflation.

Per Markets Insider, JPMorgan recently stated that “The re-emergence of inflation concerns among investors has renewed interest in the usage of bitcoin as an inflation hedge.”

With COVID-19 continuing to wreak havoc on world economies, and a government penchant for unchecked printing of FIAT, investors are a keeping watch for assets which are inflation resistant and uncorrelated with traditional markets.  While this slot has been filled by gold for decades, the precious metal is clearly going out of favour as a younger, more tech-oriented demographic becomes increasingly involved with investing.  As it stands, these investors, and a growing number of institutions, are turning to BTC on a frequent basis.

In addition to inflation, JPMorgan also points to adoption of the Lightning Network as pouring fuel on the fire.

Market Reaction

With the flurry of activity seen this week, it wasn’t only BTC that thrived.  The overall digital assets marketcap was able to re-breach the $1 trillion threshold.

It is clear that a steady accumulation of BTC was occurring through the beginning of the week, followed by a sharp rise in prices in the hours following SEC Chairman Gary Gensler’s commentary regarding cryptocurrencies on the 5^th.

Moving forward, this positive momentum does not appear to be waning.  First it was retail investors fueling the rise of BTC, now it is both institutions and high-profile personalities like Kevin O’Leary who recently divulged that he has now allocated 7% of his portfolio towards crypto – eclipsing the gold for the first time.