Clear Regulations Will Boost Next Bull Run, Hedge Fund Co-Founder


A former head of risk at Credit Suisse believes the next crypto bull market will emerge from “clear regulation” in the United States — which he expects to happen in early 2023.

Speaking to TBEN, the former head of valuation risk at Credit Suisse, CK Cheng said some of the ongoing regulatory efforts in the United States will soon “open the doors” of traditional finance to crypto.

Cheng is a former executive at investment bank Credit Suisse who left his position in July 2021 to co-founded ZX Squared Capital, a crypto hedge fund targeting family offices and high net worth individual clients.

Cheng said there has been a recent turnaround in traditional institutions’ attitudes towards crypto, with many dipping their toes into crypto waters for the first time.

In August, one of the world’s largest asset managers, BlackRock, partnered with crypto exchange Coinbase to give its institutional clients access to Bitcoin (BTC) and crypto through Coinbase Prime.

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More recently, several big names in finance have joined forces to create a digital asset exchange for institutional and private investors, backed by financial giants such as Charles Schwab, Citadel Securities and Fidelity Digital Assets.

“Today you see a lot more traditional financial institutions getting involved in the crypto space […] You see enormous interest,” said the hedge fund manager.

Cheng also stressed that many more are “waiting for further regulatory clarification in the US” before jumping in:

“That will really open the door for traditional financial institutions, you know, many more institutions, bring investors into the space. So I would say this will be the way the next bull market will start. ”

He also believes that the Executive Order from US President Joe Biden earlier this year sent an important signal to traditional investors, although he admits that the “devil is in the details” when it comes to how crypto trading will be regulated and whether a cryptocurrency will be regulated. considered a commodity or a security.

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“From an institutional perspective, as long as the regulations are clear, that gives a very clear path for an institutional investor to see that they don’t let themselves trip over regulatory issues. […] that will bring institutional investors into the space,” he added.

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When asked when the tipping point will be, Cheng said he expects regulatory clarity to be “worked out” sometime early next year.

“So hopefully there will be something much more concrete early next year. And that will, you know, help the market in terms of sentiment in terms of people’s perception [of crypto]. I think regulation will help with that.”

Asked about when he expects BTC prices to rise in the near term, Cheng says he expects October to be a “highly volatile” month for BTC.

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“October is quite a volatile period, especially when combined with high inflation, with a lot of discussion about the Fed and policy changes. The concern is that if the Fed tightens too much, the US economy could be plunged into a severe recession.”

Cheng believes this uncertainty will cause a lot of volatility in both the stock and crypto markets, but will stabilize next year. At the same time, the months leading up to Bitcoin’s next “halving” in 2024 could begin a “new bull market.”