As the crypto-verse rumbles with the start of another "crypto summer," the tectonic plates of the financial landscape are shifting once again. Bitcoin, the unruly child of the finance world, has come of age and attracted the attention of Wall Street's titans.
As the halving day draws ever nearer, we find that Bitcoin has gained more than 80% in price this year, and the fat cats of Wall Street smell money in the air. BlackRock and several other large firms are filing to run a Bitcoin exchange-traded fund (ETF). In the meantime, the SEC continues its aggressive scrutiny of crypto brokers like Coinbase. It’s a juxtaposition that warrants a closer look.
To appreciate the significance of this, let's rewind to the last Bitcoin halving event of May 2020.
Halving is a built-in deflationary mechanism that cuts Bitcoin's reward for miners by 50%. This happens about every four years and sets the stage for a surge in price. In 2020, BTC started the year at $7,200 and ended at $29,000, a 300% gain.
A similar move would put BTC at $116,000 by the end of 2024. Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
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As we bask in the warm glow of this crypto summer, however, a cold wind blows from the SEC. Recent events have seen the agency taking an adversarial approach to crypto brokers like Coinbase while green-lighting Wall Street bigwigs for a Bitcoin ETF.
A discerning observer might question if there's collusion between the government and Wall Street. While this is a weighty allegation, one can't overlook the underlying dynamics at play. The relationship between Wall Street and regulatory agencies is long-standing and well-established. It wouldn't be far-fetched to suggest that the government, in its attempts to regulate this new frontier, may feel more comfortable dealing with traditional financial institutions than the innovative crypto firms that represent unknown territory.
But here's the thing: Cryptocurrency, including Bitcoin, was conceived as a tool of financial freedom, decentralization, and democratization. Its rise to prominence should not be a victory march for the already-powerful Wall Street firms. It should be an empowering moment for the little guy who wants to protect his wealth from government overreach.
Indeed, the upcoming Bitcoin halving event, which is the impetus for the current crypto summer, serves as a stark reminder of the decentralized ethos of Bitcoin. It's an automated, unalterable process that’s immune to the whims of central authorities or financial powerhouses.
As Wall Street's stalwarts scramble to secure Bitcoin ETFs, we risk the very decentralization that makes Bitcoin and cryptocurrencies in general so revolutionary. Yes, these financial giants' endorsement of Bitcoin does lend legitimacy to the asset, but if the primary access to Bitcoin becomes tightly controlled by these firms, we could end up with a paradoxical scenario — a decentralized asset that’s predominantly managed in a centralized manner.
Monetary philosophy aside, BlackRock, Schwab, and others' quest for an ETF means it will be easier for more people to buy and could eventually be open to retirement funds like 401(k)s. Add this to the halving, which means that there will be fewer coins to buy, and the coin will likely go higher, bringing the rest of the crypto market along with it.
This is a good time to stick your toe in.
All the best,