This year has been off to a great start for Bitcoin, with the cryptocurrency seeing a huge rally.
Jakub Porzycki | Nurphoto | Getty Images
The markets reacted on Thursday to a stricter regulatory stance from the U.S. authorities.
At 4:04 PM, the price of BTC rose 2.06% to $24,500.00 As per Coin Metrics, Ethereum was down 1.21% at $1.679.31.
According to Vijay Ayyar, Vice President of Corporate Development and International at Crypto Exchange Luno, there are “increasing signs that the market bottomed last November and has turned bullish.”
“We are gaining in momentum here and any bad news is being shrugged off, typical signs that the market believes the worst is over,” he told CNBC.
Early this week, investors became concerned after the U.S. government issued a warning about digital currencies.
On Monday, The New York State Department Of Financial Services submitted an application to create the Binance USD and BUSD stablecoins. Stablecoins are cryptocurrency that is pegged to real-world assets. They can be backed either by cash or bonds, and BUSD is linked to the U.S. dollar one-to-one.
Paxos confirmed that the Securities Exchange Commission has told the company that it might take action, alleging that BUSD is a security. The SEC has not yet filed any formal charges against Paxos.
On Thursday
The crypto market has seen a major upturn in the past week, with a $84 billion surge in value. This comes after a tumultuous period of bankruptcies, failures and the collapse of major exchange FTX.
Yuya Hasegawa, an analyst at Japanese Crypto firm Bitbank, has stated that this rise is largely due to a shift away from altcoins to bitcoin, following the regulatory decisions made by the SEC.
“The crypto rally of Wednesday was unexpected, but the most noticeable aspect was the boost of bitcoin,” Hasegawa told CNBC. “The current regulatory climate looks like it could be a headwind for the crypto market, but it seems like some money is moving from altcoins to bitcoin, as it is the only cryptocurrency labeled as a ‘commodity’ by SEC chair Jeremy Sullivan. This is why bitcoin’s market dominance is on the rise.”
The rising interest rates set by the Federal Reserve has also had a positive effect on crypto markets, as investors look to counter inflation. Bitcoin has had a particularly close relationship with the tech-heavy Nasdaq index, which has seen a 16% increase year-to-date. This figure is dwarfed by the 49% rise of bitcoin in the same period.
Bullish sentiment also seems to be increasing due to a belief that the economic downturn may not be as severe as expected, which could lead to a slowdown in the rate of interest rate hikes.
“Generally, the markets are pleased that inflation is declining and the hikes in interest rates will be slowing down, but that we may avoid a big recession or experience something much milder,” said Ayyar.
