Credit Suisse’s former head of risk believes that the next crypto bull will be driven by “regulatory certainty” in the United States. He expects this to occur in early 2023.
CK Cheng, former head of valuation risk at Credit Suisse said that some of the US regulatory efforts will soon “open up the doors” to traditional finance and crypto.
Cheng, an ex-executive at Credit Suisse, was promoted to co-found ZX Squared Capital in July 2021. The crypto hedge fund ZX Squared Capital targets family offices and individuals with high net-worth.
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Cheng stated that there has been a significant shift in the stance of traditional institutions towards crypto. Many are now trying out crypto for the first-time.
One of the largest asset managers in the world, BlackRock, partnered with cryptocurrency exchange Coinbase in August to offer institutional clients access to Bitcoin ( BTC ) and crypto through Coinbase Prime.
Recent developments in finance have seen several prominent names join forces to create a digital asset exchange for institutional and retail investors. This exchange is being supported by financial giants like Charles Schwab, Citadel Securities and Fidelity Digital Assets.
The hedge fund manager stated that “nowadays you see a lot of traditional finance institutions getting involved with the crypto space […] It can be very exciting.”
Cheng stressed that there are still many “waiting for the U.S. regulation to be further clarified,” prior to jumping in.
“That will open up the doors for traditional financial institutions. It will bring in a lot more investors and institutions into the space. That’s how I believe the next bull market will begin.
He believes that the Executive order from U.S. President Joe Biden earlier in the year has been a significant signal for traditional investors. However, he acknowledged that the “devil is always in the details” when it came to regulation of crypto trading and whether a cryptocurrency would be classified as a commodity or security.
He said, “From an institution perspective, as long the regulation is clear that that gives an institutional investor a very clearly path to see that they don’t trip over themselves in regulatory issues that will attract institutional investors into this space,” he continued.
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Cheng answered the question about when the tipping point would occur and said that he expected regulatory clarity to be in place by early next year.
“So hopefully there will be something concrete by the beginning of next year. That will be good for the market, in terms sentiment and people’s perception of crypto. Regulating crypto will be a good thing.
Cheng said that October will be “very volatile” for BTC when Cheng was asked about the future direction of BTC prices.
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October is volatile, especially with high inflation and a lot of discussion about the Fed’s policy changes. There is a concern that the Fed could tighten too much and lead to a serious recession in the U.S.
Cheng believes that this uncertainty will cause volatility in the stock and crypto markets, but that it will stabilize by next years. The months before the next Bitcoin “halving,” in 2024, could see “another bull markets.”
