(Bloomberg) — Bitcoin’s rally to near a record high is stirring up animal spirits — not just in the cryptocurrency market itself, but in the broader financial world that left the digital asset sector for dead last year.

Bloomberg’s Most Read

The shift in sentiment can be seen in the improving outlook for deal flow, highlighted by Robinhood Markets Inc.’s purchase of crypto exchange Bitstamp Ltd. on Thursday, to a resurgence of venture capital investment to what some Analysts expect a record number of initial public offerings from companies linked to the sector.

In the crypto market itself, there has been a notable return of the characteristics of previous bull markets: celebrities are once again promoting crypto and new tokens are being created at a rate of thousands per day, with around 330,000 coins debuting in the Ethereum ecosystem in April and May only, according to crypto data tracker Dune.

Taken together, it demonstrates that there is nothing like rising prices to make investors forget the financial carnage of the past – including bankruptcies of cryptocurrency exchange FTX and lender Celsius – in a market that is more famous for its scandals and boom cycles. and fall.

“Investors often have short memories,” said Campbell Harvey, a finance professor at Duke University. “When market sentiment is high, they give extra weight to good news and tend to downplay bad news that may have happened in the past.”

Bitcoin rose this week to within 2.5% of the all-time high of $73,798 reached in mid-March amid growing demand for newly authorized exchange-traded funds. Although the leading digital currency has risen nearly 70% already this year, the gains pale in comparison to the returns of extremely speculative memecoins like Dogwifhat and Bonk.

This year’s boom accelerated when the Securities and Exchange Commission approved ETFs investing directly in Bitcoin in January. Then, in May, the agency took a step toward approving similar spot Ether ETFs, a move that many in the industry saw as giving in to increasing political pressure to legitimize crypto and create new laws that would make it easier for exchange companies to operate. digital assets.

US Bitcoin ETFs attracted inflows for an unprecedented 18th consecutive day through Thursday. The group’s net subscriptions to nearly a dozen products stood at $15.6 billion, bringing total assets to $62.3 billion, according to data compiled by Bloomberg.

The story continues

Large financial companies are delving deeper into crypto. Earlier this week, Mastercard once again allowed users of the world’s largest cryptocurrency exchange, Binance, to make purchases on its network. Binance settled with the Department of Justice over anti-money laundering and other violations last year and is still fighting SEC charges.

“Over the past few months, we have reviewed the enhanced controls and processes that Binance has implemented,” a Mastercard spokesperson said in a statement. “It is based on these efforts that we have decided to allow Binance-related purchases on our network. This status depends on ongoing reviews.”

Crypto MNA is also heating up. This week, Bitcoin miner Core Scientific Inc. rejected an unsolicited $1 billion takeover offer from artificial intelligence startup CoreWeave Inc., just days after announcing a partnership. On Thursday, Robinhood said it will acquire Bitstamp for $200 million to expand its crypto business in Europe.

“A U.S. regulatory framework creates an environment of speed of innovation that accelerates institution-building purchasing decisions and drives a robust M&A environment,” said Elliot Chun, partner at consultancy MNA Architect Partners, in a note. recent. “I will be bold and say that in May 2024, our industry has officially transitioned from #TheGreatPurge and entered #TheGreatSurge.”

Crypto funds are booming, with more funds launched in the first quarter than at any time since the second quarter of 2021, according to Crypto Fund Research.

Talk of new crypto IPOs is reviving, with Kraken said to be in talks for a pre-IPO funding round, while planning an IPO as early as 2025, Bloomberg reported on Thursday. If cryptocurrency prices continue to rise, the next 18 months could see the largest wave of cryptocurrency-related IPOs on record, according to Renaissance Capital, a pre-IPO researcher.

“I think if these companies can point to explosive revenue growth or strong profits, that will attract investor interest,” said Matthew Kennedy, senior market researcher at Renaissance. “I suspect the financials are there and investors will take them with a grain of salt – they know it’s a cyclical business, a lot of companies are like that.”

Bloomberg Businessweek Most Read

©2024 Bloomberg LP

Fuente