BlackRock CEO Larry Fink has attributed the recent rally in Bitcoin’s price to the increasing interest and demand for cryptocurrencies. He made these remarks in response to a false news report about the approval of a spot ETF, which temporarily triggered a surge in Bitcoin’s value.
While Fink refrained from commenting on BlackRock’s own application for a spot Bitcoin ETF, he acknowledged that clients from around the world have been expressing the need for crypto. “Some of this rally is way beyond the rumor. I think the rally today is about a flight to quality, with all the issues around the Israeli war now, global terrorism,” Fink said in an interview on Fox Business.
He further added, “I think there’s more people running into a flight to quality, whether that is in Treasuries, gold or crypto, depending on how you think of it. And I believe crypto will play that type of role, as a flight to quality.”
On Monday, Bitcoin’s price soared to nearly $30,000 following a post that falsely claimed the BlackRock ETF had received approval from the Securities and Exchange Commission (SEC). Although Bitcoin experienced a decline after the false report was debunked, it managed to retain some gains.
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At the time of writing, the largest cryptocurrency by market capitalization was trading at $28,200, up 1% over the past day, according to CoinGecko. It has recorded a 7.4% increase over the past month and an impressive 47.4% gain over the past year, driven in part by the anticipation surrounding the approval of a spot ETF.
Analysts believe that the SEC will likely be forced to approve multiple spot BTC ETF applications following the Grayscale victory. In September, JPMorgan analysts led by Nikolaos Panigirtzoglou said that the SEC will have to greenlight Bitcoin ETFs after Grayscale’s win in court against the SEC. The US court ruled in favor of Ripple in an ongoing lawsuit brought by the SEC, claiming that selling XRP on exchanges does not constitute an investment contract.
However, the court also ruled that XRP is a security when sold to institutional investors. The JPMorgan analysts wrote that Grayscale’s win implies that the SEC would have to retroactively withdraw its previous approval of futures-based Bitcoin ETFs to defend its denial of Grayscale’s proposal of converting its Bitcoin trust into an ETF.
According to the analysts, such a move would be “very disruptive and embarrassing for the SEC” and appears unlikely. It is more likely that the SEC would be forced to approve the spot Bitcoin ETF applications that are still pending from several asset managers, including Grayscale.
The anticipation of a Bitcoin ETF approval has been a driving factor behind the recent price rally. Investors see an ETF as a way to gain exposure to Bitcoin in a regulated and traditional investment vehicle. This would potentially attract more institutional investors and increase mainstream adoption of cryptocurrencies.
However, it is important to note that the SEC has been cautious about approving Bitcoin ETFs due to concerns over market manipulation, custody solutions, and investor protection. The SEC has previously expressed the need for a robust regulatory framework before approving such ETFs.
Despite the regulatory uncertainties, the demand for cryptocurrencies, particularly Bitcoin, continues to grow. Institutional investors, such as BlackRock, have recognized this demand and are exploring ways to meet the needs of their clients.
In conclusion, the recent rally in Bitcoin’s price can be attributed to the increasing interest and demand for cryptocurrencies. Larry Fink, CEO of BlackRock, believes that cryptocurrencies could play a role as a flight to quality asset. Analysts predict that the SEC will be forced to approve Bitcoin ETFs following Grayscale’s victory against the SEC. The approval of a Bitcoin ETF could further drive the price of Bitcoin and lead to increased mainstream adoption of cryptocurrencies. However, regulatory concerns still need to be addressed before widespread ETF approval can occur.
