A former chief risk officer at Credit Suisse believes the next crypto bull market will stem from “regulatory clarity” in the United States, which he expects to happen in early 2023..
Speaking to Cointelegraph, the former head of valuation risk at Credit Suisse, CK Cheng said that some of the ongoing regulatory efforts in the United States will soon “open the doors” from traditional finance to the crypto space..
Cheng is a former Credit Suisse investment bank executive who stepped down in July 2021 to co-found ZX Squared Capital.a cryptocurrency hedge fund targeting family offices and high net worth individual clients.
Chen said that there has been a recent sea change in the stance of traditional institutions towards cryptocurrencies; many dipped their toes in the crypto waters for the first time.
In August, one of the world’s largest asset managers, BlackRock has partnered with cryptocurrency exchange Coinbase to provide its institutional clients with access to bitcoin (BTC) and cryptocurrencies through Coinbase Prime..
More recently, Several big names in finance have come together to create a digital asset exchange serving institutional and retail investors, which is being backed by financial giants such as Charles Schwab, Citadel Securities and Fidelity Digital Assets..
“Today, see many more traditional financial institutions getting involved in the cryptocurrency space […] You can see a huge interest,” said the hedge fund manager.
Cheng also stressed that there are many more “waiting for further US regulation clarification.” before launching:
“That will really open the door for traditional financial institutions, you know, bring a lot more institutions, investors into the space. So I would say that is how the next bull market starts.”
He also believes that US President Joe Biden’s executive order earlier this year has been an important signal to traditional investors, although he admitted that “the devil is in the details” when it comes to how cryptocurrency trading will be regulated and whether a cryptocurrency will be consider a commodity or a value.
“From an institutional perspective, as long as the regulation is clear, that gives an institutional investor a very clear path to see that they won’t run into regulatory problems. […] And that will bring institutional investors into the space,” he added.
When asked when the tipping point will occur, Cheng said he expects regulatory clarity to “develop” sometime early next year.:
“So we hope that early next year there will be something much more concrete. And that will help, you know, the market in terms of sentiment in terms of people’s perception [de las criptomonedas]. I think regulation will help with that.”
Asked how BTC prices will move in the short term, Cheng says he expects October to be a “very volatile” month for BTC.
“October is quite a volatile time period, especially when combined with high inflation, with a lot of debate in terms of the Fed and policy change. The concern is that if the Fed pushes too hard, the US economy could go into a severe recession.”
Cheng believes that this uncertainty will drive high volatility in both the stock and crypto markets, but that it will stabilize by next year.. At the same time, the months to go until bitcoin’s next halving in 2024 could start “another bull market.”
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