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Crypto is having a 2023 moment
Bitcoin (BTC-USD), the dominant cryptocurrency, surpassed $42,000 on Mondayreaching a high for the year and seemingly surpassing a recent series of scandals that have weighed heavily on digital assets.
Investor sentiment has become more optimistic in recent weeks, driving up the value of digital tokens and crypto company shares. Backers are particularly interested in the possibility of regulators approving a crypto exchange-traded fund, giving investors greater exposure to digital assets without the full risk of owning them directly. The Securities and Exchange Commission is expected to rule on the applications next month.
So far this year, bitcoin is up more than 150%, bringing other tokens and players along with it. Ethereum, the second largest cryptocurrency by market capitalization, is up more than 80%.
The gains also benefit publicly traded companies in the sector. Coinbase (PIECE OF MONEY), which benefited enormously from the hectic stock market days of the COVID lockdown, is once again enjoying a moment in the sun. The platform’s share price has increased more than fourfold since the start of the year. And Marathon (MARA), the digital assets company that mines cryptocurrencies, has more than tripled its stock price since the start of the year.
Markus Thielen, Head of Research at DeFi Research.com, recently told Yahoo Finance Live that ETF approvals could push the price of Bitcoin to near $60,000., as investors shift some of their funds into crypto. Since institutional investors allocate hundreds of billions to ETFs, even moving a small percentage of those funds would result in significant gains, he said.
“There are about $120 billion worth of precious metals ETFs in the United States, meaning gold and silver, and if you just move 10-20% of that and move it to Bitcoin, you get something on the order of $25 billion in inflows,” Thielen said.
Bitcoin’s rally shows investors could move past recent crypto scandals. (STRF/STAR MAX/IPx 202/AP) (STRF/STAR MAX/IPx)
An increasingly popular belief on Wall Street that the Fed has likely ended its interest rate tightening campaign, along with pent-up demand, are also driving crypto’s rise , did he declare.
Crypto’s rally at the end of the year also highlights what industry executives see as the sector shaking off its troubled past. Last month, Changpeng Zhao, the founder of the world’s largest crypto exchange Binance, pleaded guilty to federal money laundering charges and resigned as CEO. The plea came shortly after the high-profile conviction of FTX co-founder Sam Bankman-Fried.
Last month, a federal jury in Manhattan found Bankman-Fried guilty of defrauding his clients, investors and lenders, Conclude a dramatic fall for the 31-year-old entrepreneur. But as he presided over the biggest crypto collapse in history, his conviction took on a deeper meaning, representing what critics saw as the industry’s propensity for fraud and illicit activity.
The story continues
As Bankman-Fried faces even more legal battles, markets are already evolving.
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on Twitter @hshaban.
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