Bitcoin (BTC) could see significant gains in the coming months, thanks to the BlackRock exchange-traded fund (ETF), according to investor and analyst Charles Edwards. Edwards, who is the founder of quantitative Bitcoin and digital asset fund Capriole Investments, recently discussed the current state of BTC price action in an interview with Cointelegraph. He believes that while Bitcoin may not be a sure bet on shorter timeframes, the overall narrative of crypto becoming a recognized global asset class is still intact.
When asked about the recent increase in Bitcoin price and the NVT ratio, Edwards stated that the current NVT level suggests that Bitcoin is fairly valued. He also noted that Bitcoin has steadily increased about 30% since February, but is now facing major resistance at $32,000, which represents the bottom of the 2021 bull market range. In the short term, Edwards has a mixed outlook and a bias towards cash until certain conditions are met, such as price clearing $32,000 or on-chain fundamentals returning to a regime of growth.
Regarding Bitcoin miners selling their BTC, Edwards acknowledged that there has been an increase in miner sell pressure. However, he believes that the rapid growth in Bitcoin’s hash rate is not sustainable long term and could trigger a Hash Ribbon capitulation. He also mentioned that delays in global mining hardware shipping in 2022 have likely contributed to the recent uptick in hash rate.
In terms of U.S. macro policy and inflation, Edwards stated that the market is pricing in a high chance of rate hikes for the rest of the year. He believes that any net change in the Fed’s plan would likely be towards a pause, as inflation has been trending down and is now below the Fed funds rate. However, he also noted that the banking system has shown considerable stress, with multiple bank collapses occurring recently. He emphasized that things could change considerably over the next six months.
When it comes to Bitcoin’s correlation with risk assets and its inverse correlation with the U.S. dollar, Edwards explained that Bitcoin has historically oscillated between periods of positive and negative correlation with risk markets. He attributed the recent high correlation to the Corona crash in 2020 and the subsequent influx of money into risk markets. He believes that as Bitcoin becomes a multi-trillion-dollar asset, it will have a more consistent positive correlation with gold and a negative correlation with the dollar.
In terms of U.S. regulatory pressure on Bitcoin and crypto markets, Edwards believes that the fears from earlier this year have been overblown. He stated that Bitcoin has long been classified as a commodity and is largely in the clear from a regulatory perspective. He also mentioned that the recent legal outcome of XRP being deemed not a security was an interesting development. Edwards believes that industry and government support for the asset class is clear, as evidenced by BlackRock’s announcement to launch a Bitcoin ETF and other leading financial institutions following suit.
Speaking about the impact of the BlackRock spot ETF on Bitcoin, Edwards believes that its approval will be huge for the industry. He stated that BlackRock, as the world’s largest asset manager, and its regulatory seal of approval will allow a new wave of capital to enter the market. He also noted that ETFs make it easier for institutions to hold Bitcoin on their balance sheets without worrying about custody or entering the crypto space.
Overall, Charles Edwards remains bullish on Bitcoin’s long-term perspective, citing the potential impact of the BlackRock ETF and the growing recognition of crypto as a global asset class. Despite some short-term uncertainties, he believes that Bitcoin stands to win big in the future.