Today’s Cryptocurrency analysis on behalf of Rania Gule Market Analyst at XS.com
Cryptocurrencies, led by Bitcoin, have held up well over the past two weeks and are currently trading at $27,043 as of the start of trading on Friday. However, the markets are facing a range of concerns and risk aversion sentiment in general. The persistence of high interest rates for an extended period has not had a significant impact on cryptocurrencies, with both Bitcoin and Ethereum rising this week.
The weakness of the U.S. dollar has also benefited cryptocurrencies, as the price of Bitcoin has risen by about 3% in the past few hours, testing a key downward trendline. Investors and cryptocurrency enthusiasts are hopeful for a price recovery as we enter the positive fourth quarter of the current year before next year’s “halving” event. Historically, cryptocurrencies have experienced notable price rebounds during the fourth quarter of each year.
There seems to be a prevailing sense of fear dominating the markets at present due to recent market developments. Many cryptocurrency enthusiasts view the idea of higher interest rates for longer periods as a threat to price recovery as the fourth quarter approaches. Higher interest rates may lead market participants to choose U.S. Treasury bonds as safe assets, weakening demand for Bitcoin and other cryptocurrencies.
The current time is the best for investing in U.S. Treasury bonds, which could also impact high-risk assets and cryptocurrencies. Higher interest rates could also affect consumer spending and reduce estimated income, potentially harming the retail sector of the cryptocurrency industry.
This comes as asset management company VanEck prepares to launch an Ethereum Futures ETF, named the VanEck Ethereum Strategy ETF, which will invest in physically settled and CFTC-regulated ETH futures contracts, as announced by the company in a statement earlier today. It is expected that we will hear in October whether a series of Bitcoin ETFs will be approved by the U.S. Securities and Exchange Commission (SEC). This could change the game for the crypto market and witness a significant influx of institutional funds and liquidity into the crypto market. Already, a few Bitcoin Futures ETFs are listed on CBOE, and an Ether ETF is set to be listed as well.
In August, Bloomberg reported that U.S. securities regulators were ready to approve Ether ETF futures for trading in the United States. However, the markets remained quiet, with Bitcoin ETFs dominating the news since then. In my opinion, since many companies have already applied for regulated futures-based exchange-traded funds, VanEck’s announcement today is not new or unexpected. Therefore, the fourth quarter of this year will be interesting regarding both Bitcoin ETFs and Ether Futures ETFs, especially after the SEC has faced increasing scrutiny over its proposed agenda against cryptocurrencies. Any decision it makes is likely to undergo thorough scrutiny, which could benefit Bitcoin and other cryptocurrencies.