- Bitcoin is up 11% to $24,655.94 around 3:36 a.m. ET, according to CoinDesk, while Ether is up more than 8% to $1,684.59.
- The value of the entire cryptocurrency market increased by more than $84.8 billion in the 24 hours prior to 3:39 a.m. ET.
- Crypto markets were on edge earlier this week following a move by US authorities into regulatory scrutiny of stablecoins.
Bitcoin had a strong start to the year as the cryptocurrency staged a huge rally.
Jakub Porzycki | Nurphoto | Getty Images
Crypto markets rallied on Thursday, shaking off a tighter regulatory stance from the US government.
Bitcoin is up 11% to $24,655.94 around 3:36 a.m. ET, according to CoinDesk, while Ether is up more than 8% to $1,684.59.
The value of the entire cryptocurrency market increased by more than $84.8 billion in the 24 hours prior to 3:39 a.m. ET.
There are “increasing signs that the market bottomed last November and turned bullish,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC.
“We’re gaining momentum here and any bad news is being shrugged off, typical signs that the market thinks the worst is over.”
Crypto markets were tight earlier this week after increased regulatory scrutiny of digital currencies by US authorities.
On Monday, the New York State Department of Financial Services ordered Paxos to stop minting new Binance USD or BUSD stablecoins. A stablecoin is a type of cryptocurrency tied to a real-world asset, and some are backed by assets such as bonds or cash. BUSD is pegged one-to-one to the US Dollar.
Paxos also confirmed that the Securities and Exchange Commission has notified the company that the agency may recommend a lawsuit alleging BUSD is a security. The SEC has yet to file charges against Paxos.
Bitcoin’s price on Thursday was at its highest level since mid-August 2022. Over the past year, nearly $1.4 trillion was wiped from the crypto market after turmoil that led to bankruptcies, project failures and business failures. All of this was rounded off by the collapse of major exchange FTX.
Yuya Hasegawa, an analyst at Japanese crypto firm Bitcoin Bank, said there is a shift from so-called altcoins, or alternative coins, to bitcoin as part of the regulatory action.
“Wednesday’s crypto rally was a bit of a surprise, but one thing stood out: it was led by Bitcoin,” Hasegawa told CNBC.
“The current regulatory environment certainly looks like headwinds for the crypto market, but it seems like some money is flowing from altcoins to bitcoin as bitcoin is the only cryptocurrency labeled as a ‘commodity’ by the SEC chairman. Consequently, Bitcoin’s market dominance is on the rise.”
SEC Chairman Gary Gensler reiterated last year that the agency views Bitcoin as a commodity rather than a security. Commodities are assets like gold, while stocks are considered securities. They are regulated differently.
Rising Federal Reserve interest rates to combat inflation also weighed on crypto markets. Bitcoin is also closely correlated with stock markets and particularly the tech-heavy Nasdaq index. The Nasdaq is up about 16% year-to-date. Bitcoin has outperformed the index and is up 49% this year.
Supporting sentiment in risky assets was the view that the economic downturn may not be as severe as expected and the Fed may slow the pace of rate hikes.
“In general, markets like the fact that inflation is coming down, rate hikes should ease from here, but also that we’re either not going to have a big recession or something very mild,” Ayyar said.
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