Time For Bitcoin To Shine
Bitcoin Listing And Custody
The future for Bitcoin became more secure last week with the announcement that the U.S. Securities and Exchange Commission (SEC) has given BNY Mellon the green light to custody digital assets.
BNY Mellon will be the first bank in the U.S. to have SEC exemption from Staff Accounting Bulletin (SAB) 121. This significant development paves the way for other financial institutions to follow suit.
The announcement by the SEC means that BNY Mellon can custody and lend against bitcoin as collateral. Offering crypto custody services could be a pivotal moment for institutional adoption. It signals the recognition of digital assets as legitimate financial instruments.
The announcement is significant.
As outlined in a previous post, the key pillars of bitcoin adoption included spot Bitcoin ETF approval, fair value accounting rules (FASB), and banks’ custody of bitcoin.
The announcement last week means that all three pillars are now in play.
Blackrock Endorsement
In addition, Blackrock announced that it would advise its investors that bitcoin is the best hedge against a U.S. debt crisis and geopolitical tensions. In a nine-page research paper titled “Bitcoin: A unique diversifier” Blackrock predict that concerns about the increasing levels of U.S. debt will drive “institutional interest”.
That report landed as the SEC announced that it approved listing and trading options on Blackrock’s iShares Bitcoin Trust (IBIT) ETF. Approval for the listing and trading options on the other ETFs will likely follow.
The SEC is just the first stage of approval (the OCC and CFTC also need to approve). However, the announcement will encourage more institutional interest and demand.
Macro Conditions Favour Bitcoin
In addition to that, the increase in private and public sector liquidity in global economies and the Federal Reserve rate cut announcement provide a significant platform.
The Federal Reserve’s announcement of a rate cut signals the start of a paradigm shift in monetary policy, easing rates and increasing global liquidity. This shift is generally favourable for risk assets like bitcoin, potentially boosting its price.
Based on bitcoin seasonality, the fourth quarter experiences a strong positive performance in the bitcoin price. However, this is a presidential election year, which will likely add some volatility.
That said, the macro conditions are favourable, global liquidity is on an upward trajectory, and bitcoin is entering its best period seasonally.
If bitcoin is going to make all-time highs, it must be in this next quarter.
Click on the Journal link below to read more about the factors currently driving the economy, the stock market and Bitcoin.
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