- Bitcoin was up 11% to $24,655.94 around 3:36 a.m. ET, while ether was up more than 8% to $1,684.59, according to CoinDesk.
- 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 tense earlier this week following a move in regulatory oversight from US authorities on stablecoins.
Bitcoin has started the year strong with a huge rally for the cryptocurrency.
Jakub Porzycki | Nurphoto | Getty Images
Crypto markets rallied on Thursday, shrugging off a tougher regulatory stance from the US government.
Bitcoin was up 11% to $24,655.94 around 3:36 a.m. ET, while ether was up more than 8% to $1,684.59, according to CoinDesk.
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 out last November and turned bullish,” Vijay Ayyar, vice president of business development and international at crypto exchange Luno, told CNBC.
“We’re gaining momentum here and any bad news is brushed off, typical signs that the market thinks the worst is over.”
Crypto markets were tense earlier this week following increased regulatory oversight from US authorities on digital currencies.
On Monday, the New York State Department of Financial Services told Paxos to stop minting new Binance USD, or BUSD, stablecoins. A stablecoin is a type of cryptocurrency that is tied to a real 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 an action alleging that BUSD is a security. The SEC has not yet filed formal charges against Paxos.
Bitcoin price hit its highest level since mid-August 2022 on Thursday. Nearly $1.4 trillion was wiped from the crypto market last year following turmoil involving bankruptcies, project failures and corporate failures. All of this was crowned by the collapse of the major stock exchange FTX.
Yuya Hasegawa, an analyst at Japanese crypto firm Bitcoin Bank, said there has been a shift from so-called altcoins, or alternative coins, to bitcoin in the wake 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.
“Current regulations certainly look like a headwind for the crypto market, but it looks like some money is moving from altcoins to bitcoin as bitcoin is the only cryptocurrency to be labeled a commodity by the SEC chairman. Bitcoin’s market dominance is on the rise.”
SEC Chairman Gary Gensler reiterated last year that the agency considers bitcoin a commodity rather than a security. Commodities are assets such as gold, while stocks are considered securities. They are arranged differently.
Rising interest rates from the Federal Reserve, designed to fight inflation, also weighed on crypto markets. Bitcoin is also closely correlated with stock markets and in particular 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.
The upbeat sentiment in risky assets was aided by the view that the economic downturn may not be as bad as expected, and that the Fed could slow the pace of rate hikes.
“In general, the markets are pleased that inflation is coming down, that rate hikes will ease from here, but also that we’re not going to have a major recession or anything very mild,” Ayyar said.
Leave a Reply