Bitcoin and the cryptocurrency markets have incurred unusually volatile sessions over the past few weeks. That’s the case even compared against the notorious volatility of blockchain reward tokens. From trekking above $8,000 to teetering off $6,000, the broader digital exchange moved all over the map. Naturally, the question is why.
On the surface, the explanation is fairly straightforward. Bitcoin suffered sharply due to regulatory rejection. The Securities and Exchange Commission considered approving a bitcoin ETF. This third attempt to move the regulatory needle enjoyed broader public sentiment because the SEC wasn’t as quick to shelf it. Unfortunately, it turned out to be a head-fake.
The cryptocurrency markets and the underlying blockchain economy has for now gone up as much as it can. Although a series of large purchases could spark another rally, cryptocurrencies require mainstream support and integration. Right now, the average person is simply afraid to get involved due to the “wild west” nature of this platform.
But aside from the bitcoin ETF disappointment, is something else at play?
As I pointed out in an earlier article for Crush The Street, bitcoin and gold share interesting parallels. Prior to the launch of the gold ETF, mainstream investors and analysts viewed bullion as an obscure investment. However, after the SEC approved precious metals ETFs, the concept (and valuation) of these asset classes skyrocketed.
Of course, bankers, including the Rothschild family, endorsed the gold-ETF project.
A similar undertaking could be occurring with the bitcoin movement. If so, it wouldn’t make sense for banking sponsors to jump onboard bitcoin and other cryptocurrency assets at elevated prices. Whether you want to call it conspiracy or fortuitous timing, blockchain tokens are suffering at just the right time. Thus, I wouldn’t be at all surprised if the SEC approves a bitcoin ETF without warning.
But another, far less controversial explanation for the bitcoin bearishness is market youth. Simply put, cryptocurrencies act like “wild west” assets because they are! This is a frontier investment, and from an organization standpoint, people are making up the rules as they go along. In other words, cryptocurrency participants don’t have the discipline that other asset-class investors leverage.
This isn’t a knock on bitcoin and the blockchain. In fact, I view this segment’s youth as a positive for profitability potential. The sky is the limit, as the old adage goes. But within that unmarked potential lies some risk.
As another saying goes, you can’t have your cake and eat it, too.