Bitcoin got off to a strong start to the year with the cryptocurrency rising significantly.
Jakub Porzycki | Nerfoto | Getty Images
The crypto market rose Thursday to fend off a tougher regulatory stance from the US government.
Bitcoin It rose 2.06% to $24,500.00 around 4:04 PM ET. ether According to Coin Metrics, it rose 1.21% at $1,679.31.
“There are increasing signs that the market has bottomed out last November and is bullish,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC.
“We’re gaining momentum here and the bad news, a classic sign that the market believes the worst is over, is being brushed aside.”
The cryptocurrency market was strained earlier this week following increased regulatory scrutiny of digital currencies by U.S. officials.
On Monday, the New York State Department of Financial Services directed Paxos to stop issuing new stablecoins for Binance USD (BUSD). Stablecoins are a type of cryptocurrency pegged to real-world assets, some of which are backed by assets such as bonds and cash. BUSD is pegged 1:1 to the US dollar.
Paxos Also check The Securities and Exchange Commission has notified the company that the authorities may recommend actions that it claims BUSD is a security. The SEC has yet to formally indict Paxos.
flow into bitcoin
Bitcoin prices on Thursday remained at their highest level since mid-August 2022. About $1.4 trillion was wiped out of the crypto market last year. After the chaos that saw bankruptcies, project and company failures. It all ended with the collapse of the major exchange, FTX.
Yuya Hasegawa, an analyst at Japanese cryptocurrency firm Bitbank, said there will be a shift from so-called altcoins or alternative coins to Bitcoin following the regulatory action.
“Wednesday’s crypto rally came as a bit of a surprise, but one stood out and that was led by Bitcoin,” Hasegawa told CNBC.
“The current regulatory environment certainly looks like a headwind for the crypto market, but bitcoin is the only cryptocurrency labeled as a ‘commodity’ by the SEC chairman, so some money is moving from altcoins to bitcoin. It seems to be moving to coins. As a result, Bitcoin’s market dominance is on the rise. “
SEC Chairman Gary Gensler reiterated last year that the SEC views Bitcoin as a commodity, not a security. Commodities are assets like gold, while stocks are considered securities. They are regulated differently.
Interest rate hikes by the Federal Reserve, designed to fight inflation, have also weighed on the cryptocurrency market. Bitcoin also correlates closely with the stock market, especially the tech-heavy Nasdaq index. The Nasdaq is up about 16% year-to-date. Bitcoin is outperforming the index, and he’s up 49% this year.
Bullish sentiment on risk assets is fueled by the view that the recession may be less severe than expected and the Fed could slow the pace of rate hikes.
“In general, the market would like inflation to fall and rate hikes to moderate, but it is possible that there will be no major recession or a very mild outcome,” Ayyar said. .
