Last week, a watershed moment was recorded in crypto regulations as a U.S. judge gave ruling affirming XRP is not a security. Compounded with this was the acceptance of BlackRock’s Bitcoin ETF application by the SEC, thereby propelling it to the subsequent stage of the approval process. These successive events prompted an upswing in XRP’s price, which jumped over 25%.
While noteworthy, these decisions stir up further regulatory uncertainties. Hence, it is incumbent upon digital asset advisors to weigh how these ongoing regulatory scenarios can influence pricing and trade volumes concerning Bitcoin, Ether and altcoins. Greg Magadini, hailing from Amberdata, shares valuable insights on these impacts.
The question of including crypto in retirement portfolio also surfaces. The answer, as stated by Bryan Courchese from Daim, is affirmative but the process involves consulting with a licensed investment advisor.
The year 2022 was plagued by numerous crypto meltdowns, including Terra Luna’s downfall, the shutdown of crypto hedge fund 3AC, and FTX’s scandal. These turbulent scenarios precipitated a bear market in the sector, primarily led by altcoins.
However, H1 2023 has witnessed a reversal in these crypto dynamics. Bitcoin led the charge in January as the Fed softened its initially stern stance. Bitcoin, contrary to its 2022 pattern, was trading based on mainstream macro news instead of crypto-specific developments.
This shift was corroborated in March as the banking crisis emerged. Bitcoin took the lead over Ethereum in response to the crisis and the Fed’s emergency intervention, a performance gap Bitcoin has upheld since.
The trends in option market activity provide another lens to observe this shift. The typical ETH over BTC implied volatility premium began to dissolve following the surfacing of macro news events.
Looking ahead into H2 2023, as the Fed continues its ‘wait-and-see’ stance and crypto-specific news starts to take the center stage, crypto regulations pertaining to Binance, Coinbase, and XRP are expected to gain momentum.
Today, Bitcoin is acknowledged as a commodity while Ethereum’s classification remains equivocal. Hence, the fate of Ethereum’s “technology bet” narrative hangs on regulatory apprehensions. However, a paradigm shift is anticipated that could steer the market towards higher beta “altcoins” in the crypto space, given the historical trend of altcoins outflanking Bitcoin in bull markets.
This discernible shift in options traders’ attention towards increased ETH implied volatility over BTC serves as a testament that crypto-regulation may become an essential segment of market activity in the foreseeable future.
Source: Coindesk
