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How Does Strategy Affect the Price of Bitcoin?
Variables in Regulatory Environment
Future Market Trends Await Observation
Yanowitz pointed out that Strategy has been making massive purchases of Bitcoin in recent months, with a total investment of over 20 billion US dollars. He believes that without this support, the price of Bitcoin may experience a significant decline. This suggests that Strategy’s buying behavior has made the market cycle of Bitcoin different from before, and the market may still be in the early stage of a bull market, rather than approaching its peak.
His viewpoint is also supported by Dan Matuszewski, the co-founder of CMS Holdings. Matuszewski believes that the current market still lacks sufficient inflow of venture capital, and the overall environment is still in a “Player vs. Player” game mode, which is different from previous bull market cycles. He analyzed:
“The impact of the market in 2021 has not completely dissipated, and liquidity is limited. Therefore, it is difficult to drive large-scale capital inflows. Venture capital is still a key indicator for evaluating the altcoin market.”
Santiago Santos, a cryptocurrency investor, also expressed a similar view, believing that the market still needs to see more capital inflows, and the current funds are mainly concentrated in a few popular assets, indicating that a comprehensive bull market trend has not yet formed.
In addition to the discussion on whether the bull market has peaked, the regulatory environment in the United States is also an important factor affecting market development. Recently, the US Congress held a hearing on “Operation Chokepoint 2.0” to discuss whether regulatory agencies deliberately suppress the access of cryptocurrency companies to banking services.
Operation Chokepoint 2.0 refers to the practice of the Federal Deposit Insurance Corporation (FDIC) and other regulatory agencies pressuring banks to prevent them from providing financial services to cryptocurrency companies, making it difficult for many cryptocurrency enterprises to obtain bank accounts.
According to the testimony of Paul Grewal, General Counsel of Coinbase, at the hearing, these actions by regulatory agencies have caused banks to hesitate in providing services to cryptocurrency companies, resulting in many companies being unable to obtain basic financial services. He stated:
“When banks proactively seek permission to provide these services, they are either ignored or subjected to onerous scrutiny until they ultimately give up.”
Furthermore, Austin Campbell, CEO of WSPN USA, also pointed out at the hearing that regulatory agencies choose to suppress the entire industry due to the misconduct of a few cryptocurrency companies (such as the FTX scandal), which is extremely detrimental to market development.
Although there have been some signs of improvement in the regulatory environment in the United States recently, Yanowitz believes that simply replacing the management of the FDIC is not enough to fundamentally change the current situation. The market still needs a clearer and fairer regulatory framework to ensure the continuous development of the cryptocurrency industry in a legal and compliant environment.
Currently, there is still disagreement in the market about whether Bitcoin has reached its peak. On the one hand, Strategy’s large-scale buying action may support the price, keeping the market from truly entering the later stages of a bull market. On the other hand, the uncertainty in the regulatory environment may still affect investor confidence.
Regardless of the stage the market is in, Yanowitz emphasizes that changes in regulatory policies and the dynamics of capital inflows will continue to be key factors influencing the cryptocurrency market in the future. Investors should closely monitor market dynamics to respond to potential risks and opportunities.