After experiencing a furious bull run following the election of President Trump last November in which bitcoin hit record price levels, the crypto market has hit a wall.
Bitcoin fell 6% over the past week, while ethereum lost nearly $22 billion in a matter of hours.
Digital-asset treasuries – the model pioneered by Michael Saylor that has spawned many copycats – are reflecting the downturn: Purchases of bitcoin by these treasuries fell from 64,000 in July to 12,600 in August, according to data from CryptoQuant.
As we near the end of September that number is at 15,500 for the month, showing “a 76% slide from the early-summer frenzy,” as Bloomberg notes.
Analysts point to the recent rate cut by the Federal Reserve as a catalyst for the selloff in the crypto market, with Kaiko head of research Adam Morgan McCarthy suggesting a buildup of excessive leverage led to speculative trading – and the price declines led to further liquidation.
Bitcoin was at about $109K on Friday, just over a month after hitting a record high of $122,882.
Nonetheless, despite this recent downturn, most market watchers appear to still be bullish on the crypto market going forward. In fact, Deutsche Bank strategist Marion Laboure said in a research note last week that she projects bitcoin will climb back up to $120,000 by the end of the year, according to Barron’s.
One factor that could help fuel another rally for digital assets is an expected flood of new crypto ETFs being launched in the coming months.
This projection comes after the U.S. Securities and Exchange Commission (SEC) recently approved rule changes for three national securities exchanges, allowing them to adopt generic listing standards for new cryptocurrency and other spot commodity ETFs.
It also eliminates individual regulatory reviews of each crypto ETF application, which will speed up the launch of the products that meet predetermined regulatory standards.
The rule changes were approved for the NYSE, Nasdaq and Cboe Global Markets.
“By approving these generic listing standards, we are ensuring that our capital markets remain the best place in the world to engage in the cutting-edge innovation of digital assets,” SEC Chair Paul Atkins said in a statement. “This approval helps to maximize investor choice and foster innovation by streamlining the listing process and reducing barriers to access digital asset products within America’s trusted capital markets.”
Wall Street firms expected to ramp up crypto activity
There are currently 21 US ETFs that own either bitcoin or ethereum – or a combination of both digital assets – and there are “scores of filings with the SEC for new products tied to other coins,” according to Reuters.
Analysts who spoke to Reuters said they expect the first ETFs launched under the new rules will likely happen in October, and will probably be tied to digital assets like Solana (SOL) and XRP.
And some of the upcoming crypto ETF activity could be coming from heavy hitters in the traditional asset management space.
BlackRock (BLK), whose iShares Bitcoin Trust is far and away the largest crypto ETF by AUM at $87.2 billion, is reportedly planning to launch a yield-driving ETF to go along with its flagship product.
And though it has sat on the sidelines while many of its peers have gone all-in on digital assets, Vanguard – which is the world’s second-largest asset manager behind BlackRock – appears ready to finally enter the crypto market.
While the firm does not seem intent on launching its own products, Vanguard will reportedly begin allowing its brokerage customers to select third-party crypto ETFs, but it’s not known yet which products will be available.
While “immediate impact” of the SEC’s rule changes “will be the addition of multiple new cryptocurrency assets included in ETFs, increasing visibility, convenience and accessibility to the industry and many new assets,” it could also create some challenges, according to Greg Benhaim, executive V.P. of product at the Canadian digital asset manager 3iQ.
"At first glance, this seems bullish for the industry, however, based on 3iQ's experience as leading innovator in ETF issuance in Canada, it may be challenging for issuers to fight for raising capital when new products are being listed every single day,” Benhaim wrote in an emailed note.
But the generic listings could also help the “average investor” distinguish between which coins to purchase, he added.
“Over the long term, this will pave the way for the industry to identify which assets have significant retail appeal in ETF format and which don't,” Benhaim said.
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