Crypto markets have had a healthy first and second quarter of 2023, with Bitcoin and Ether leading the way. Layer 1’s, TradFi indices, and crypto-based stocks have all seen positive gains, with small contract platforms leading the way in the second quarter. Correlations between BTC and TradFi indices have decoupled from fairly strong levels, to virtually no correlation.
The first 74 days of the second quarter were quiet, with BTC sinking from $28,134 to $27,173, a 5% fall-off. But the action and resulting price activity accelerated, starting with the U.S. Securities and Exchange Commission’s (SEC) suit against the world’s largest crypto exchange, Binance, on June 5. Prices then about-faced 20% following the spot BTC applications by BlackRock, Invesco, and WisdomTree.
Markets are tentatively expecting that the first opportunity for the SEC to approve, deny, or extend its deliberations about the BlackRock’s offering will occur in August. Anything other than an approval would likely be bearish. A rejection would likely depress BTC prices.
Altcoins have seen a disparity in performance compared to BTC and ETH, and regulatory clarity from the SEC may ultimately be more pertinent to altcoins than to BTC and ETH. Macroeconomic narratives may also subside, with employment and the growth of consumer revolving credit taking a larger portion of center stage.
The SEC has rejected multiple applications from high-profile firms and seems fiercely committed to deem crypto a security and to rein in what the agency considers a lack of consumer protection, said CoinDesk Managing Editor, Markets The Americas James Rubin.