Commentators and analysts within the crypto industry are fast losing optimism about the market’s ability to revive the zing it was known for in its earlier days, most notably around the end of last year. The Element Group, a crypto-oriented economics and virtual assets solutions analyst, has recently come out with a report that explains the lack of energy in the market which has bogged it down considerably in the past few weeks.
The report suggests that the key reason behind crypto losing its liveliness is the US Securities and Exchange Commission’s (SEC) continued delay in green-lighting the bitcoin ETF proposals submitted to it of late. The lack of regulatory approval has made the industry take a gloomy downturn but analysts have offered some alternate theories as well. Kevin Luon and Thejas Nalval, analysts with the Element Group, have offered the argument that the doom and gloom in terms of the market’s volatility may just be indicative of the industry gradually moving towards an acceptance of Bitcoin as currency that retains a long-term purchasing power or store of value (SoV) function. Although still a premature proposition, the possibility seems intriguing.
Another explanation that was suggested for the blandness that has gripped the crypto scene involved the increasing efficiency of bitcoin’s mechanism for price discovery.Luon and Nalval saw the volatility index of BTC drop from 8.04% in January of this year to 2.71% over the last couple of months, prompting the duo to claim the market had lost all flavour before staggering into Q4 of this year.
The report further highlighted the adverse impact on the market from brokerage shops that let people indulge in illegal betting on the price of bitcoin and BTC bucket shops.
Given the analysts believe that the SEC’s decisions to approve or reject bitcoin ETFs have an effect on the health of the crypto scene, the future of the market flavour doesn’t look all too appealing. This year, the SEC turned down 10 ETF proposals including the one by the Winklevoss brothers.