Crypto markets were on edge earlier this week following increased regulatory scrutiny from U.S. authorities on digital currencies
Crypto markets gained on Thursday, brushing aside a tougher regulatory stand from the U.S. government.
Bitcoin advanced 2.06 per cent to $24,500.00 at around 9:04 pm GMT while ether gained 1.21 per cent at $1,679.31, as per Coin Metrics.
There are growing indications that the market bottomed in November 2022 and has turned bullish, Vijay Ayyar, VP of corporate development and international at crypto exchange Luno, told CNBC.
We are gaining in momentum here and any bad news is being dismissed, typical indications that the market believes the worst is over, he said.
Crypto markets were on edge earlier during the week after heightened regulatory actions on digital currencies by U.S. authorities.
On Monday, the New York State Department of Financial Services ordered Paxos to halt minting new Binance USD, or BUSD, stablecoins. A stablecoin is a kind of crypto currency pegged to a real-world asset and a few of them are backed by assets like bonds or cash. BUSD is pegged one-to-one to the U.S. dollar.
Paxos also confirmed that the U.S. Securities and Exchange Commission (SEC) has informed the firm that the agency could recommend an action that claims BUSD is a security. The Securities and Exchange Commission has not yet formally levelled any charges against Paxos.
The price of Bitcoin on Thursday was highest since mid-August 2022. Last year, around $1.4 trillion was wiped off the crypto market after turmoil which saw bankruptcies, failures of projects and firms. All that was topped off by the collapse of major crypto exchange FTX.
Yuya Hasegawa, an analyst at Japanese crypto firm Bitcoin Bank, stated that there is a shift from so-called altcoins, or alternative coins, to bitcoin amid 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 ongoing regulatory environment definitely appears to be a headwind for the crypto market, but it appears that some money is moving from altcoins to bitcoin, since bitcoin is the only crypto currency that is classified as ‘commodity’ by the Securities and Exchange Commission chair. Accordingly, bitcoin’s market dominance is on the up, Hasegawa said.
Gary Gensler, chair of the Securities and Exchange Commission, reiterated last year that the agency views bitcoin as a commodity rather than a security. Commodities are assets such as gold whereas stocks are considered securities. They are regulated differently.
Increasing interest rates from the Federal Reserve aimed at fighting inflation also weighed on crypto markets. Bitcoin is also closely correlated to equity markets, especially the Nasdaq index. The Nasdaq is nearly 16 per cent higher year-to-date. Bitcoin has surpassed the index and is 49 per cent higher this year.
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