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Anyone else feeling the shift in cryptocurrency sentiment?

Is crypto back? It seems like every two weeks there is a headline that says Bitcoin (BTC) and Ether (ETH) are trading at prices not seen since 2021, when the crypto market was on the rise. It is not obvious that the price increase will stop any time soon; This time it feels different.

This is an excerpt from The Node newsletter, a daily roundup of the top crypto news on CoinDesk and beyond. You can subscribe to the full newsletter here.

The pandemic-era bull market was a time of mass exuberance, hysteria and fun. From Elon Musk to my mother, everyone seemed to be talking about crypto. Celebrities endorsed meme coins and purchased NFTs. Crypto became a cultural touchstone: perhaps the best indicator of an economy that experienced wild swings as the world began to reopen after the pandemic, a strange time dominated by “vibes.”

In comparison, the recent market upswing has been quiet. Surely a few friends have reached out and asked if they should buy Bitcoin – an anecdotal indicator that points to increased retail interest. But overall, it seems that a lot of people have noticed as crypto prices have risen.

After the wave of protocol failures and corporate bankruptcies in 2022 that began with the highly publicized implosion of Terra and culminated in the collapse of FTX, talking about cryptocurrencies has naturally become toxic. The same level of enthusiasm and lightheartedness is hard to regain while still experiencing the hangover.

In addition to the price movement, there are a number of indicators that suggest that the crypto market recovery has begun in full force. MetaMask, the primary means of accessing the Ethereum network, is nearing an all-time high in monthly active users (30 million); Coinbase, the largest US crypto exchange, posted its first profitable quarter in two years as trading volumes rebounded; and according to Google Trends, Bitcoin search interest is recovering (a little).

A number of factors could be contributing to the increasing interest. The Bitcoin halving, an event that occurs approximately every four years, is always a popular media topic. Meme coins and token airdrops feed the idea that the crypto industry is printing free money to people. Endorsements from figures like BlackRock CEO Larry Fink and even government agencies in countries like Hong Kong and the United Arab Emirates are fostering a sense that crypto is technologically significant.

Additionally, there is a growing feeling that the worst may be legally over for crypto. Major overhanging concerns have been more or less resolved, often in favor of crypto. The Justice Department has settled with Binance and imposed a severe fine, but one of the world's largest exchanges appears to be able to bear it. The US Securities and Exchange Commission's hostile attempt to “regulate through enforcement” failed after Ripple won a significant legal battle in court and the agency faced further uphill battles in court. And the FTX bankruptcy proceedings are coming to an end, with full refunds expected for all former users.

Increasingly, governments, including in the US, appear to want to work with industry to develop policies that protect consumers without hindering crypto development. The European Union has passed key MiCA rules, while Britain, Hong Kong, Nigeria and others are vying to become crypto “hubs.”

It's as dangerous as it is foolish for journalists to try to predict the future, especially in an industry as volatile and rapidly changing as cryptocurrency. There is no guarantee that the Bitcoin rally will continue and there is always a chance that fortunes could reverse. But there is certainly a growing feeling that crypto is on the cusp.

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