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A crypto recovery is in sight, CoinShares explains. So far, however, there are various reasons that are hampering the price development of digital assets. In the USA, misconduct by the authorities is disappointing investors’ expectations.
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Crypto recovery in sight?
Is a crypto recovery finally in sight? Yes, says CoinShares analyst James Butterfill. Investment products of cryptocurrencies are therefore recording gradually growing inflows.
“Digital asset products are seeing inflows for the second week in a row, totaling $864 million, reflecting cautious but improving investor sentiment,” CoinShares wrote in an email to CoinPro.
Despite the already high inflows, bears still dominate the market. Because: While inflows rose to almost 900 million US dollars, outflows grew to 952 million US dollars, resulting in a net minus.
“Digital asset products in the digital asset sector recorded outflows of $952 million for the first time in four weeks,” CoinShares continued.
The tug-of-war between bulls and bears for the crypto market is therefore continuing noticeably. In addition to James Butterfill, the data aggregator CoinMarketCap also reports an increasing sentiment.
Last week, the CMC Fear & Greed Index still classified the crypto market with 22 out of 100 points. In the meantime, the index has risen to 29 points. This means that it is still in “fearful” territory, but is approaching the neutral zone.
Bitcoin and Co.: Why are prices only growing cautiously?
Usually the end of the year is always a good phase for Bitcoin. The largest cryptocurrency grows best shortly before the end of the year. November is historically the most profitable month for BTC, as records from Coinglass prove.
The entire crypto market usually benefits from the growing Bitcoin price. The fact that BTC did not experience any gains this November is therefore an anomaly. November 2022 was the last November in which the cryptocurrency slumped – at that time there was a central, incisive event due to the FTX crash.
- Bitcoin
(BTC) - Price $87,401.00
- Market Cap
$1.75 T
Currently, the crypto market is being held back by disappointed expectations, CoinShares argues.
“For James Butterfill, CoinShares’ Head of Research, this reflects a negative market reaction to delays in the passage of the US Clarity Act,” wrote asset manager CoinPro.
The previous regulatory uncertainty continues as a result. The CLARITY Act is a bill that officially classifies cryptocurrencies into different categories. Cryptos therefore fall into one of three definitions, the supervision of which is subject to the regulatory authorities SEC or CFTC, depending on the category.
CoinShares argues that the fact that the US legislature has so far failed to pass the law is causing distrust among investors. The delay is particularly disastrous for Ethereum.
“Ethereum recorded the largest outflows, totaling $555 million. This is understandable, as Ethereum has the most to gain or lose from the Clarity Act,” the asset manager explained.
Bitcoin has been considered a commodity in the USA since the CFTC classified it in 2015. Ethereum, on the other hand, has been classified contradictorily several times and still occupies a gray area to this day. ETH could benefit from the growing legal certainty on the US market.
Since July, the US Securities and Exchange Commission SEC has informally classified Ethereum as a commodity. The CLARITY Act is intended to make this status official. The law makes this possible because it provides new templates for classifying cryptocurrencies.
