Bitcoin (BTC-USD) shoots above $43,000 on Wednesday while US regulators continue to have conversations centered around the crypto space. Fundstrat Global Advisors VP of Digital Asset Strategy Sean Farrell outlines what the Federal Reserve's expected monetary policy in 2024 could mean for cryptocurrencies and the likelihood of the Securities and Exchange Commission (SEC) approving a spot bitcoin ETF.

"We have obviously... an ETF approval that is anticipated to come within a few weeks, which... I think should bring in a new cohort of investors into the fold, increase flows into digital assets," Farrell says.

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Video Transcript

DIANE KING HALL: When you think about where crypto is now, you say "now is an opportune time to be fully allocated in the market," that's a quote. What's the thesis behind that?

SEAN FARRELL: Yeah. First, thanks for having me. You know, right now we have this perfect concoction of both macro and industry specific tailwinds. You know, obviously, everyone knows the dovish sentiments from the Fed a couple weeks ago or last week, rather, really put bears on their heels, you know, certainly suggested that inflation was tamed. And regardless of whether it is or not, it does seem like the worst of the tightening is behind us.

And then from an industry-specific setup, we have, obviously, as you alluded to, an ETF approval that is anticipated to come within a few weeks, which I think should bring a new cohort of investors into the fold, increase flows into digital assets. And then we have the halving coming up in at the end of Q1 into Q2. So there's really this perfect storm of positive tailwinds heading into next year.

JOSH LIPTON: And, Sean, just to emphasize that one point on that spot bitcoin ETF, I'm interested to know, whether do you think that's a real-- if and when we see that approval maybe early next year, right, do you see that's a real positive catalyst for bitcoin? Because the team at JPMorgan, it was interesting, Sean. I don't know if you saw this note. They were telling clients recently. They actually assigned a pretty high chance. They think that ultimately is kind of a sell-the-news moment. But I guess you disagree with that?

SEAN FARRELL: Yeah. Look, it depends on your time frame. And we'll be watching closely to see how we trade into ETF approval, because, functionally speaking, even if the ETFs are approved, we think they'll be approved between January 8 and January 10, even if they're approved on those dates, you're not going to see any sizable inflows until those products launch.

And so, you know, there certainly is a scenario in which you could have people frontrunning the ETF news. And perhaps, you have some acute drawdown following actual approval. But you know, I think we're telling clients, it's probably not worth trading around too cute of a manner, just because we think any consolidation post-ETF approval is going to be short-lived.