Concerns over higher interest rates put a damper on Bitcoin

By Marcus Sotiriou, analyst to UK-based digital asset broker Global block

Bitcoin (CRYPTO: BTC) remains hesitant as data shows that this recent rally was mainly driven by futures, while spot sold off. We know this because aggregate CVD (Cumulative Volume Data) for spot has stagnated while CVD for futures has increased. This suggests that this price rise was driven by speculation or hedging rather than genuine demand.

The market is eagerly awaiting the minutes of the Federal Reserve’s latest policy meeting on January 25-26 at 7 p.m. tonight. This will give more information on how the Federal Reserve plans to raise rates and begin the process of quantitative tightening. These minutes could indicate how aggressive the Federal Reserve will be and the likelihood of a 50 basis point rate hike in March. As the market is now pricing in the scenario of a 50 basis point rate hike to 58.9%, based on the data, I think the market is unlikely to be shocked by what is being released today.

More major financial institutions are entering the space as DBS, Southeast Asia’s largest bank by assets, plans to launch cryptocurrency trading services for investors this year. retail customers. DBS initially launched a crypto-trading service for institutional investors in 2021. CEO Piyush Gupta said during the bank’s earnings call on Monday, “what we will focus on in the first half, the first two quarters of this year is to make access to digital assets much more convenient. He explained: “Today, what happens is that you have 24 hours a day, 7 days a week, but customers still have to call and talk to the bankers, so the first order is to get everything online, make it self-service, make it instant, and make sure the internal processes are robust to be able to support that.

In addition, Fidelity, the world’s fourth-largest asset manager, launched an ETP (Exchange Traded Product) in Europe. This will have a fee of 0.75%, making it the cheapest Bitcoin ETF in Europe. Even though the United States only accepted a Bitcoin ETF linked to futures contracts, Europe and Canada were much more permissive. The product will be settled like shares and people will be able to buy it on exchanges in Frankfurt and Switzerland. Being able to buy crypto from traditional financial systems, like DBS and Fidelity, which are familiar to the general public, is a big step towards mainstream adoption.

Stephen V. Lee