SEC Update on Bitcoin
On December 8, Jurrien Timmer, the director of global macro in Fidelity’s Global Asset Allocation Division, discussed a potential SEC update on Bitcoin. However, it remains uncertain whether this would cause a price surge or not.
Selling The News
Timmer noted that the current Bitcoin price action is not driven by traders speculating ahead of SEC news. Most BTC is held long-term by “true believers.” However, there has been increased interest in Bitcoin futures, suggesting some traders may be positioning for an announcement. They could sell futures to buy spot Bitcoin after the news.
“That’s not to say it will be a ‘sell-the-news’ event, but it does suggest that the price action could be more two-sided.”
Moreover, with the macro backdrop changing from easy liquidity to tighter Fed policy, the value proposition for Bitcoin is less compelling than before. M2 money supply, which grew during the last crypto bull market, has been contracting since the Fed started tightening in early 2022.
“All of which makes the value proposition for both gold and Bitcoin a bit less urgent today than it was a few years ago.”
M2 Money Cycles
M2 money supply and Bitcoin cycles have been correlated previously. Some analysts suggest that this has been the driver of markets rather than halving events.
Timmer also described Bitcoin as “a form of digital gold, with a venture twist.” He believes spot BTC ETFs will drive further investment into the asset.
“In my view, attention on the SEC’s deliberations around pending product applications could theoretically attract a new wave of investors or advisors who previously didn’t have Bitcoin on their menu.”
Hot Take: Bitcoin and the SEC Update
The potential SEC update on Bitcoin has generated speculation, but its impact on the price remains uncertain. While some traders may be positioning themselves by trading Bitcoin futures, it is unclear whether this will lead to a “sell-the-news” event. Additionally, the changing macro backdrop and contracting M2 money supply have made the value proposition for Bitcoin less urgent. However, Timmer sees potential for spot BTC ETFs to attract new investors or advisors to the asset. Ultimately, the SEC’s decision could have implications for Bitcoin’s future trajectory.
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