Crypto markets are up, again. Bitcoin hit $44,490 on Tuesday, its highest since April 2022 and back at levels seen before the dramatic collapses of FTX (November 2022), Three Arrows Capital (June 2022), Celsius (June 2022) and even before TerraUSD, the so-called algorithmic stablecoin widely seen as the first domino to have fallen, back in May last year.
Stocks of crypto-related companies – such as bitcoin miners – rose too.
Regulators around the world have long warned that cryptocurrencies are risky investments. U.S. regulators called out the crypto industry in particular for not doing enough to stop the flow of illicit finance, the G20’s Financial Stability Board said cryptocurrencies could threaten global financial stability and the Bank for International Settlements said that crypto assets are not the future of finance and have increased financial risks in less developed economies.
So what’s going on?
Many analysts cite the possibility that a spot bitcoin ETF could be approved by U.S. regulators as one reason. The idea is that more people will buy bitcoin once they can through an exchange-traded fund, so people are buying bitcoin in anticipation.
Analysts also cite the possibility of major central banks cutting interest rates as supporting the price. Lower rates tend to bolster riskier financial assets, and markets have increasingly been betting that the U.S. Federal Reserve is finished with hikes and is due to start cutting rates early next year.
Meanwhile, analysts said the industry generally welcomed the settlement of the U.S. Department of Justice’s years-long investigation into Binance – which resulted in the founder stepping down as CEO and pleading guilty to breaking U.S. anti-money laundering laws – even as new CEO Richard Teng faces a challenging task in turning the company around.
