Much has happened in the crypto world since we spoke to you just last week! As I write this, bitcoin is trading for more than $51,000. Big banks are pushing hard to release crypto products. And the SEC is doing SEC things. Let’s take a look at the news that’s driving the markets.
News: U.S. Bank is the fifth-largest retail bank in the United States. And it has launched a new crypto custody service. The service will allow fund managers to safely store bitcoin, bitcoin cash and litecoin at U.S. Bank. Eventually, the U.S. Bank custody solution will be able to store ethereum and other cryptocurrencies.
Analysis: This is another moment of institutional investors driving this bull market. And Fidelity has been leading the charge. It has at least $13 billion in crypto assets under management. It’s successfully launched a bitcoin fund that has attracted $102 million in investments. It bought a 7.4% stake in a bitcoin mining company. And that’s just the tip of the iceberg. Wells Fargo and JPMorgan have already moved into crypto. According to a Fidelity survey, 52% of institutional investors hold bitcoin. And 90% of institutional investors find the asset class “appealing.” The U.S. Bank move into crypto solidifies what we have known for some time now — crypto is here to stay. And it’s growing.
News: Bank of America investment strategists have concluded that crypto is “too large to ignore,” and “there could be more opportunity than skeptics expect.”
Analysis: It’s tempting to dismiss Bank of America’s conclusions as “better late than never.” But that would be underselling this news. Bank of America is the second-largest bank in the U.S. When it says crypto is too large to ignore, that carries some weight. And when it recognizes there is an opportunity to make money, that gives crypto investment opportunities additional credibility.
News: Treasury Secretary Janet Yellen told CNBC that the inflation we’re experiencing right now is “transitory.” But the forces causing inflation won’t necessarily “go away over the next several months.” Yellen also said supply chain problems were the root cause of the problem.
Analysis: The treasury secretary seems to have a different definition of transitory than the rest of us. According to the Fed’s preferred index, inflation is up 3.6% from a year ago. Other measures suggest inflation is substantially higher. The Fed would prefer a 2% inflation rate. Energy costs are rising. Freight costs are rising. Car plants are idling because they don’t have the necessary computer chips. There are even shortages of key ingredients in bread. Bitcoin is often looked at as a good inflation hedge. So macro trends are working for crypto right now.
News: The SEC decided to continue deliberating on four bitcoin ETF applications. The next SEC decisions on these applications are due in late November and December.
Analysis: This is just the SEC being the SEC. It always extends the decision making on bitcoin ETFs as many times as possible before rejecting the application. In other SEC news, the agency doesn’t want to ban crypto. But it is investigating Circle and the USDC stablecoin.
Those are the big headlines driving the crypto markets and affecting the industry. We’ll keep you posted as new developments occur.