According to investor and analyst Charles Edwards, Bitcoin (BTC) could experience significant gains with the introduction of the BlackRock exchange-traded fund (ETF). Edwards, the founder of Capriole Investments, a quantitative Bitcoin and digital asset fund, recently discussed the current state of BTC price action in an interview with Cointelegraph. Despite the volatility of the past few months, Edwards believes that the long-term perspective for Bitcoin remains unchanged. While he acknowledges that Bitcoin may be less predictable on shorter timeframes, he maintains that the overall narrative of cryptocurrencies becoming a globally recognized asset class is still valid.
When Edwards last spoke in February, the price of Bitcoin was around $25,000. Since then, BTC has risen by 20%, and its NVT ratio has reached its highest levels in ten years. However, Edwards explains that the current NVT level of 202 indicates that Bitcoin is fairly valued according to this metric alone and does not provide much insight into future price movements.
Edwards still holds the view that Bitcoin is in a “new regime” and expects a steady upward grind for the next 12 months. However, he notes that the relative value opportunity is slightly diminished now, as Bitcoin approaches major price resistance at $32,000. He remains cautious in the short term and suggests staying in cash until one of three conditions is met: the price clears $32,000 on daily/weekly timeframes, the price mean-reverts to the mid-$20,000s, or on-chain fundamentals show signs of growth.
Edwards acknowledges that Bitcoin miners have been selling BTC at higher rates, which could impact prices. However, he believes that the risk factor associated with miner selling has diminished over time due to the decreasing share of miners in the network.
Regarding U.S. macro policy, Edwards expects the Federal Reserve to raise interest rates in the second half of the year, but he considers it excessive given the declining trend of inflation. He suggests that any net change in the Fed’s plan would likely be toward a pause, considering the considerable stress in the banking system and the potential for economic changes in the next six months.
Bitcoin’s correlation with risk assets and its inverse correlation with the strength of the U.S. dollar have been declining recently. Edwards explains that Bitcoin has historically shown periods of positive and negative correlation with risk markets. He believes that as Bitcoin becomes a multi-trillion-dollar asset, it will likely be more interconnected with major asset classes and exhibit a consistent positive correlation with gold, which has a highly negative correlation with the dollar.
Regarding U.S. regulatory pressure on Bitcoin and crypto markets, Edwards believes that the fears from early 2023 have been exaggerated. He points out that Bitcoin has already been classified as a commodity and is in the clear from a regulatory perspective. While there may be uncertainties surrounding various altcoins, Edwards sees growing support for the crypto asset class from both industry and government.
Edwards predicts that the approval of the BlackRock spot ETF will have a significant impact on Bitcoin. As the largest asset manager in the world, BlackRock’s approval will bring a new wave of capital into the market and provide institutional investors with a clear signal to enter the crypto space. Edwards compares this event to the launch of the gold ETF in 2004, which led to a massive bull run for gold. He sees the Bitcoin ETF as another step towards broad regulatory acceptance and the establishment of Bitcoin as a serious asset class.
Disclaimer: This article does not provide investment advice or recommendations. Readers should conduct their own research before making investment decisions.