Crypto Industry More Attractive to Investors Due to Regulatory Action

Crypto Industry More Attractive to Investors Due to Regulatory Action

  • A recent MLIV Pulse survey shows an increased willingness from U.S. investors to invest in cryptocurrencies.
  • The majority of respondents believe that the price of Bitcoin (BTC) will range between $17,600 and $25,000 at the end of the year.
  • A correlation between BTC and S&P 500 risk aversion remains.

As the U.S. Securities and Exchange Commission (SEC), along with other regulatory bodies around the world work to increase their oversight and control over cryptocurrency trading firms, investors are becoming more confident in investing in the crypto space, according to a recent MLIV Pulse survey, cited by Bloomberg

Around 60% of those surveyed indicated that the legal action taken against crypto companies that have been in trouble in recent months represents a positive sign for the asset class, which has lost two-thirds of its market value this year alone. 

The respondents suggested that the investigative action that followed the bankruptcies of Three Arrows Capital and Celsius Network, along with the SEC’s pursuit of Yuga Labs, the creator of the popular Bored Ape Yacht Club NFT collection, are proof of that. 

“I'm in the 'yes' camp,” said TIAA Bank's Global Markets President Chris Gaffney, “as a professional investor, you need a regulated investment opportunity and it opens doors for more professional investors to get into crypto, if it is more regulated.”

For Gaffney, the more investors can get from “Wild West” crypto assets and traditional investments, the better.

A Change of Perspective for Investors

The optimistic sentiment expressed by the 564 respondents extends to Bitcoin (BTC), the world’s largest cryptocurrency by market capitalization. Close to half of investors surveyed project that the digital asset will close the year out with a price oscillating somewhere between $17,600 and $25,000.

A prior poll carried out in July illustrated a substantially more pessimistic attitude towards the price of cryptocurrency. At the time, investors posited that BTC was more likely to sink to the $10,000 level this year than to rise to $30,000. 

Although participants had a much broader range of options to choose in the most recent study thatn in previous editions, the publication seemed to clarify a change of stance in the industry. 

“Our investors and markets recognized that decentralized protocols have unique advantages that could benefit not only crypto markets, but traditional markets more broadly as well,” Uniswap Labs COO Marie-Katherine Leder told Bloomberg TV. 

Since July, the lowest price point registered by BTC has been $18,171, with $25,203 as the highest, and a notable decrease in its overall volatility. According to the ‘T3 Bitcoin Volatility Index‘, volatility is down 33% since Bitcoin’s all-time high price of almost $69,000, hit on November 10th, 2021.

The BTC Risk Aversion Correlation Continues

On the other hand, the leading cryptocurrency has maintained a high level of correlation with the risk aversion of the S&P 500 stock indices since March 2022. As risk aversion grew across the financial markets as a result of the Fed’s persistent interest rate hikes, the price of Bitcoin consistently measured losses in value. 

Four out of ten respondents believe that the relationship between digital assets and technology stocks will continue for the next 12 months, while 43% indicated plans to increase their exposure to crypto in the same period.

On the Flipside

  • The two most common responses made in the investor survey, when asked to characterize the crypto space, were “Ponzi” and “future”.

Investment advisor Victoria Greene, A representative of G Square Private Wealth, emphasizes that there are still too many unknowns regarding the status of cryptocurrency investments, regulation, and trading platforms. 

For the enthusiasts and promoters of digital assets, they are the future, while those holding a more traditional view of business will maintain that the sector is simply a Ponzi scheme, Greene explained.

Why You Should Care

  • Interest in regulating the crypto industry in the immediate future has grown among governments and regulatory bodies worlwide.
  • Central banks feel that crypto assets represent a clear threat to the existing financial system, and to the security of users due to their lack of regulation.

The results of the MLIV Pulse survey further suggest that investor confidence in the sector tends to increase with the growth of regulatory intervention in the crypto industry.


Read more about regulation and government responses to crypto:

Sam Bankman-Fried Clears the Air on Controversial Crypto Regulatory Framework

Stablecoins Should Be Complementary to Digital Dollar, Says Interim FDIC Chief

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