The cryptocurrency markets are relatively flat, with most of the major cryptocurrency prices including Bitcoin trading up or down less than 1% on a 24-hour chart. Regardless of the current stability, there are some major events around the corner that will likely result in major volatility.
The current stability is following a massive price decline, where Bitcoin fell from its weekly highs of just under $7,400 to its weekly low of around $6,000. As usual, this decline resulted in a significant drop for alt-coins, many of which fell 10-20%, and are now resting near their year-to-date lows. Ethereum (ETH) fell from its weekly high of nearly $290 to its weekly low of $190 and is currently sitting near its year-to-date low.
Upcoming Events Could Determine the Foreseeable Future for Cryptocurrency Prices
Although the future for cryptocurrencies looks bleak, there are multiple upcoming events and news revelations that could lead to tremendous price volatility, including the approval or denial of the upcoming CBoE/VanEck/SolidX Bitcoin ETF, the approval of the Bakkt exchange by the US CFTC, and the rumored project by Citigroup to develop a custodial solution that would negate the need for a Bitcoin ETF.
First and foremost, the most immediate event that will likely trigger a lasting price cycle for Bitcoin and the general cryptocurrency markets is the SEC’s verdict on the highly anticipated CBoE VanEck/SolidX Bitcoin ETF. Although the SEC has denied all other Bitcoin ETF applications, many analysts see this one in particular as the most likely to be approved.
If approved, the markets will likely rally on the hope that Wall Street dives into the markets, and Bitcoin will likely lead this surge, followed by alt-coins. The approval will renew market sentiment and could bring back investors who had been soured by the persisting bear market.
If the SEC denies the application, or delays it until later this year, Bitcoin will likely crash, potentially marking new yearly lows while dragging alt-coins down with it. The crash will likely stem from an overwhelmingly negative market sentiment and a rush of day traders trying to short Bitcoin.
If the US Commodities and Futures Trading Commission approves the application by ICE backed cryptocurrency exchange, Bakkt, to become a fully licensed and regulatory compliant exchange, this could lead to an unprecedented institutional on-boarding, bringing billions of dollars into the cryptocurrency markets. Bakkt has already secured partnerships with household companies, including Starbucks and Microsoft.
Arguably one of the most important news pieces following the decision on the Bitcoin ETF is whether or not Citigroup releases their newly leaked “digital assets receipt,” which would allow institutions to invest in physical Bitcoin in a completely secure and regulatory compliant manner.
News of the rumored digital assets receipt product was originally announced on Business Insider, in which unnamed sources close to Citigroup discussed the new product. The product would be structured like that of an American depository note, which allows US based investors to purchase foreign stocks that aren’t traded on any exchanges in the US.
The unnamed sources explained how the product would work, saying:
“In this case, the cryptocurrency would be held by a custodian, with the so-called DAR issued by Citigroup, the people said. The bank would alert the Depository Trust & Clearing Corp., a Wall Street middleman that provides clearing and settlement services, that it issued a receipt, one of the people said. That lends an important layer of legitimacy and gives investors a way to track the investment within a system that they’re already familiar with, the person added.”
If released, the product would largely negate the need for a Bitcoin ETF, as it would act as a suitable alternative without any sort of additional risks or difficulties.
Business Insider also notes that:
“It’s unclear what stage of development Citi is in with the project and when it might launch, but the bank has begun reaching out to potential partners. A Citigroup spokeswoman declined to comment on the bank’s plans.”
Regardless of the SEC’s decision on the Bitcoin ETF, the CFTC’s decision on the Bakkt exchange, and the potential release of Citigroup’s digital asset receipt product, these are all pressing matters that will contribute to the volatility of cryptocurrency prices in the coming months.