
When Crypto prices were hitting new heights in 2021, we frequently received texts from friends such as when we asked if they owned said token, answers were often s too late or s too late.
In 2023, the Fed had to raise rates four times and shrunk its balance sheet by more than $500 billion. The SEC filed a civil lawsuit in June alleging that Binance and Coinbase, two of the biggest cryptocurrency exchanges, failed to register properly. The risk landscape has changed significantly today. The Fed's interest rate hikes are much closer than a beginning. While rate cuts may remain 9-12 months away, the market often anticipates the Federal Reserve's actions months before they happen. The SEC continues the investigation into crypto, but the U.S. courts have awarded the industry some major wins in the Ripple and Grayscale cases. macro and regulatory risks at the margin are still significant but declining.
We are entering the'skepticism' phase of the bull market. The Crypto Fear and Greed Index, despite 2023's fast start, was up at 6:58 a.m. on Wednesday. In August, spot trading on centralized crypto exchanges dropped to $475 billion, the lowest in three years. While Bitcoin is up -66% YTD, at $27,525 it is trading -60% below its all-time high of $69,045.
We think a Blackrock-branded Bitcoin ETF will do more to accelerate mainstream adoption of digital assets than anything that's happened in the history of crypto. There are still regulatory hurdles to clear, but we think it is a matter of when, not if.
What is the first part of this answer? If you have an investment thesis that you like, you go with it. You also have to make sure you're not looking at this as a gamble, and you have determined your appropriate allocation, risk, etc. If you're playing short-term trade or long-term hold, you need to have a strategy in place.
If you think that a spot BTC ETF will be approved soon, this might be a good time to make an allocation. An approve would likely send the price of ETH and BTC much higher. You can determine if you want to re-allocate or just hold your crypto for a longer period.
First, let them know you understand and can help with an allocation to crypto. In the end, do some due diligence and have a strategy for those who want to invest in crypto. From the on-ramp, custodian, and services you'll offer, choose the services you'll offer. Have the conversation with your clients about their investment strategies, risk profile, and allocation.