Bitcoin has had a strong start to the year with the cryptocurrency seeing a major rally.
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The crypto market rallied on Thursday, ignoring a tougher regulatory stance from the US government.
Bitcoin up 11% to $24,655.94 at around 3:36 a.m. ET while ether was up more than 8% at $1,684.59, according to CoinDesk.
The value of the entire crypto market has grown by more than $84.8 billion in the 24 hours before 3:39 a.m. ET.
Vijay Ayyar, vice president of corporate and international development at crypto exchange Luno, told CNBC: “There are more and more signs that the market bottomed last November and has turned into a trend. upward direction.
“We’re gaining momentum here and any bad news is being dismissed, typical signs that the market believes the worst is over.”
The crypto market rallied earlier this week after US authorities increased regulatory oversight of digital currencies.
On Monday, the New York State Department of Financial Services ask Paxos to stop minting new Binance USD, or BUSD, stablecoins. Stablecoins are a type of cryptocurrency pegged to real-world assets and some backed by assets like bonds or cash. BUSD is pegged 1:1 to the US dollar.
Paxos also confirmed that the Securities and Exchange Commission has notified the company that it may recommend an action alleging that BUSD is a security. The SEC has yet to officially bring any charges against Paxos.
Flow into bitcoin
Bitcoin price on Thursday hit its highest level since mid-August 2022. Last year, nearly $1.4 trillion was wiped off the crypto market. after chaos which saw bankruptcy, failure of projects and companies. It was all accomplished by the collapse of the major exchange FTX.
Yuya Hasegawa, an analyst at Japanese crypto firm Bitcoin Bank, said there was a shift from so-called altcoins, or altcoins, to bitcoin following the regulatory action.
“Wednesday’s crypto rally was a bit unexpected but one thing stood out: it was led by bitcoin,” Hasegawa told CNBC.
“The current regulatory environment certainly feels like a headwind for the crypto market, but it does appear that some money is moving from altcoins to bitcoin, as bitcoin is the only cryptocurrency that is owned by owners. SEC chairman labeled it a ‘commodity’. As a result, bitcoin’s market dominance is increasing.”
Gary Gensler, chairman of the SEC, recall last year that the agency views bitcoin as a commodity rather than a security. Commodities are assets like gold while stocks are considered securities. They are regulated differently.
Rising interest rates from the Federal Reserve designed to combat inflation also put pressure on the cryptocurrency market. Bitcoin also has a strong correlation with the stock market and especially the tech-heavy Nasdaq index. Nasdaq is up about 16% year-to-date. Bitcoin has outperformed the index and is up 49% this year.
The upbeat sentiment in risk assets was supported by the view that the recession might not be as bad as predicted and the Fed could slow the pace of rate hikes.
“In general, the markets like the fact that inflation is falling, rate hikes are expected to ease from here, but it’s also possible we won’t have a big recession or something like that,” Ayyar said. It’s very light.”
