Bitcoin's SEC Buzz: Unraveling Market Dynamics

On the 8th of December, Jurrien Timmer, the head of global macro at Fidelity's Global Asset Allocation Division, shared insights regarding a potential update from the SEC concerning Bitcoin.

Nevertheless, it remains uncertain whether this could act as a catalyst for a surge in prices or not, according to him.

Timmer highlighted that the ongoing price movements of Bitcoin don't seem to be influenced by traders speculating ahead of any SEC-related news. The majority of BTC, he pointed out, is being held for the long term by dedicated enthusiasts.

Could the murmurs of an SEC update on Bitcoin be the next big thing? Or a “sell-the-news moment?” That’s a tough one to answer, but let's consider the key factors: ???? pic.twitter.com/3I4hS8VNdG

— Jurrien Timmer (@TimmerFidelity) December 7, 2023

Navigating News Impact

The expert in macroeconomics emphasized that the upward trend in price doesn't seem to be driven by speculative actions anticipating news. This is attributed to the fact that a small proportion of BTC has been held for less than three months, implying a scarcity of short-term speculators.

Nonetheless, there has been a notable uptick in interest in Bitcoin futures, indicating that certain traders may be strategically positioning themselves in anticipation of an announcement. They might opt to sell futures contracts to later acquire spot Bitcoin post-announcement.

"While it may not necessarily result in a 'sell-the-news' scenario, it does imply that the price dynamics could become more balanced," he explained.

Furthermore, the macroeconomic landscape has transitioned from a period of abundant liquidity to a more restrictive Fed policy. Timmer observed that the value proposition for Bitcoin is currently less compelling compared to the favorable conditions in 2020-21.

He drew attention to the M2 money supply, which expanded during the previous crypto bull market but has been contracting since the Fed initiated tightening measures in early 2022.

"This paints the current historical phase more akin to the 1940s than the 1970s," he concluded, underscoring, "This contributes to a somewhat less pressing value proposition for both gold and Bitcoin today than a few years ago."

M2 Money Flow Trends

Historically, the cycles of M2 money supply and Bitcoin have exhibited correlations, with some analysts suggesting that this dynamic has driven markets more than the halving events.

I continue to believe that #bitcoin's 4 year cycles are just coincidences and have little to do with the halvenings.

Global M2 money supply has actually been having its own "4 year cycles" as of late, and those cycles have been reflected in most risk assets, including bitcoin pic.twitter.com/kMQMNdp9Gq

— Pledditor (@Pledditor) September 5, 2023

Timmer characterized Bitcoin as "a form of digital gold, embellished with a venture aspect." He described it as "gold with an exponential flair." Conclusively, he anticipated that ETFs for spot BTC would play a pivotal role in attracting additional investments into the asset.

"In my perspective, the focus on the SEC's considerations regarding pending product applications could potentially draw in a new wave of investors or advisors who hadn't previously considered Bitcoin for their portfolios."

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