Signs of end of ‘crypto winter’ as regulatory fog begins to lift
CRYPTOCURRENCIES were testing year-highs on Friday (Jul 14), as a run of favourable regulatory and investment moves have started to shift momentum in markets that had been stuck in a rut for months.
Bitcoin traded at its highest price since June 2022 overnight, touching US$31,818 on the Bitstamp exchange. It is up more than 90 per cent for the year so far, and nearly 30 per cent in a month.
Second-biggest token Ether had its best session since March. Ripple, which a US judge ruled could be legally sold on public crypto exchanges, soared 73 per cent.
“The regulatory environment is changing,” said Matthew Dibb, chief investment officer at crypto asset manager Astronaut Capital. “And (from) what we have seen in the last 24 hours, it could be for the better.”
The Ripple ruling came together with contested fraud charges against the former boss of bankrupt crypto lender Celsius Network, and moves into the market by finance firms BlackRock and Fidelity.
Investors say it is driving a mood shift.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
“Ripple stakeholders were waiting for some regulatory clarity. Yesterday, the court seems to have provided just that,” said Justin d’Anethan, head of business development in Asia at Keyrock, a digital-assets market maker in Hong Kong.
The language remains somewhat unclear, he said, but the finding that XRP tokens sold on public crypto exchanges were not securities under the law “probably serves as a precedent... and so digital assets turned ‘risk-on’ in no uncertain way”.
It unleashed a rally in smaller cryptocurrencies called “altcoins”, with tokens such as Solana, Matic and Stellar up between 15 per cent and 50 per cent, and shares in exchange Coinbase up 24 per cent to a year-high.
Traders said liquidity was low on the altcoin moves, but steadily improving in Bitcoin and Ether. Turnover for Coinbase stock was the highest in 14 months on Thursday, giving weight to a move that has more than doubled the stock price in a month.
Crypto assets are now trading near or above levels plumbed when the collapse of the FTX exchange last November plunged the sector into the depths of what has been called the “crypto winter”.
FTX imploded when it was unable to honour a rush of withdrawals and its failure, exposing customers to losses, added momentum to global regulatory efforts at reining in the sector, especially to protect small investors lured by fast returns.
China has all but banned crypto. US investigators raking over FTX have accused founder Sam Bankman-Fried of multibillion-dollar fraud, to which he has pleaded not guilty.
Celsius founder Alex Mashinsky also pleaded not guilty to his charges on Thursday. To be sure, plenty of other legal challenges remain pending, and market setbacks are expected.
Coinbase and bigger rival Binance face lawsuits from the Securities and Exchange Commission (SEC), and, in Binance’s case, from other regulators as well. A top SEC official said last month the industry has “an ethos built around non-compliance”.
The entrance of traditional finance businesses into crypto, bringing in large sums, has evoked memories of the rally that lifted Bitcoin 300 per cent in 2020.
The world’s biggest asset manager, BlackRock, filed to launch a Bitcoin exchange-traded fund last month. Earlier in July, exchange operator Cboe refreshed its filing for a similar fund to be run by asset manager Fidelity.
“We’d gone through this long period of just consistently negative news to make the space look pretty grimy, and everyone was shaking their heads,” said Chris Weston, head of research at brokerage Pepperstone in Melbourne.
“For the first time in a while, it’s been consistently positive news coming though and that means you’ve got momentum.” REUTERS
Share with us your feedback on BT's products and services
