Markets, BlackRock and Vitalik – Semih Sercan Erkul

Following the interest rate cut in March 2020 to ease the effects of the Covid period on the economy, the US Federal Reserve cut interest rates for the first time in four years and announced a 50 basis point cut. Another 50 basis point rate cut is expected before the end of the year and an additional 100 basis point rate cut in 2025.

Following the announcement, the bitcoin price increased by over 5%, while altcoins also moved. It is too early to say whether the alt season that cryptocurrency investors are eagerly waiting for will come, but we will see together. One of the metrics that shows this; the ratio of bitcoin market value to the market value of all cryptocurrencies, or dominance value, is currently around 57.75%. With altcoins gaining more value compared to Bitcoin, bitcoin dominance will decrease, heralding the alt season. Let me also remind you that when Ether reached its record value, this value fell to 40%.

There are two topics that caught my attention during the week that I will single out for BlackRock.

The first of these is BlackRock publishing an article emphasizing that bitcoin is a unique asset for portfolio diversification purposes. The 9-page report, which also includes correlation values ​​with SPX and gold, is worth examining. It states that bitcoin’s long-term success could be positively affected by concerns about global money markets, geopolitical tensions, and the financial and political stability of the United States. Although it is emphasized that bitcoin is in the risky asset class, this situation shows that it has a structure that differs from traditional risky assets.

Another is that BlackRock has received SEC approval for options trading for its spot bitcoin ETF. Options are a type of derivative transaction that brings together investors who see risk and opportunity at a later date.

This type of transaction allows the investor to obtain the right to buy or sell bitcoin at a certain price on a future date today. The approval of this type of transaction, which is frequently preferred by institutional and professional investors in terms of risk management, will also contribute to bitcoin’s market liquidity and trading volume. It is likely that we will see applications and acceptance from other institutions in this area in the future. Bitcoin will gradually acquire other features of traditional financial products and increase its adoption in the market. One of the news that I personally await most excitedly in this area is that bitcoin can be used as collateral in traditional finance. Although the probability of this happening in the near future is low, I think we will reach those days step by step.

Finally, I will mention a nice event. This week I had the chance to watch the movie Vitalik: The Story of Ethereum before it was released. Thanks again to the Scroll and Clave teams who organized this event. I really liked this production, which includes how Ethereum came to be, the difficulties in establishing a structure that will benefit humanity without making a profit, Vitalik’s push to leadership, and his comments on the main philosophy of Ethereum. Although the movie, which follows a chronological timeline, ends abruptly, I am sure that if you are in the decentralized world for more than financial gain, you will leave with a smile on your face.

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