Are the stars finally aligning for the crypto market?

Following a crackdown on cryptocurrency exchanges in the US which included two of the biggest players in the exchange market – Binance and Coinbase, it seemed that the crypto winter might become not just prolonged but deeper.

Very soon after this though with fresh announcements and developments the crypto bulls are back in the game.

The big players are coming in

BlackRock and Citadel Securities are entering crypto space. BlackRock announced application for a BTC spot ETF.  With Citadel, they launched an exchange to cater for institutional investors only.

The timing of both the crackdown and the announcements about BlackRock and Citadel isn’t a coincidence. It seems that the US is likely to give the cryptocurrency market to established traditional markets. The idea of having Binance US – a Chinese exchange being the biggest cryptocurrency exchange in the US market was never going to float with the political establishment.

Plus, crypto was one of the few markets in which banks and other big US players were late to get in.

Long story short is that we saw recently was the US taking back its cryptocurrency market from outside players and giving it to their traditional financial champions. And this was achieved by using their regulator.

Fed Chair Powell’s testimony

Yesterday mr. Powell talked about the regulation of cryptocurrencies. He highlighted that they see stablecoins are a form of money that needs oversight.

He also said that BTC and cryptocurrencies have a “staying power”.

This is exciting mainly because the narrative is starting to change. With players such as BlackRock and Citadel entering the crypto space, and the Fed chairman acknowledging stablecoins as a form of money and his comments about BTC, our view is that the market is finally ready for the big money to start flowing in.

The future of Crypto

Our view on these developments is that we will see more and more traditional banks and brokers in the US enter the cryptocurrency market and offer services to their customers in a regulated manner.

The US market was stolen by regulators from foreign entities and will be given to the establishment. We believe it’s likely that we will see something similar happening in the UK, EU and other countries that are closely aligned with the US.

With BlackRock’s application for the BTC spot ETF, we believe it’s likely that they will probably be the first big traditional player to get the approval for that product. As the biggest asset manager in the world, this could mean big inflows into BTC.

With BTC halving coming sometime next year, an event which usually coincides with all time highs for BTC, and all of the developments mentioned, we believe that provided that there isn’t a big shock event in markets, it’s likely that we can see BTC reach new all-time highs next year.

BTC technical analysis

Following all these developments, BTC made a strong move to the upside which started on Monday. Yesterday the price broke above 30k USD and was within a few hundred bucks of the yearly high which stands at 31170.96. This region has been an established support/resistance which currently acts as resistance.

Breaking above this level can mean that we can see a potential for a quick move towards the 40k handle.

On the other hand, if the resistance holds, a move back towards 25-26k is likely.