14-7-2023 (SINGAPORE) Cryptocurrencies are experiencing a surge in prices as a series of positive regulatory and investment developments have started to shift the momentum in markets that have been stagnant for months.
Bitcoin reached its highest price since June 2022, reaching $31,818 on the Bitstamp exchange. It has risen more than 90 percent this year and nearly 30 percent in the past month.
The second-largest token, Ether, had its best session since March, and Ripple, following a US judge ruling that it can be legally sold on public crypto exchanges, saw a 73 percent surge.
“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, along with fraud charges against the former CEO of bankrupt crypto lender Celsius Network (which are contested), and the recent market entry of finance firms BlackRock and Fidelity, have contributed to a shift in sentiment among investors.
“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.
He added that the language remains somewhat unclear, but the finding that XRP tokens sold on public crypto exchanges are not securities under the law “probably serves as a precedent.”
This development has triggered a rally in smaller cryptocurrencies, known as “altcoins,” with tokens such as Solana, Matic, and Stellar experiencing gains ranging from 15 to 50 percent. Shares in the exchange Coinbase also surged 24 percent to a yearly high.
“If centralized crypto projects aren’t securities, then it may make it more likely for the Commodity Futures Trading Commission to be the primary regulator for the industry, which is something most people in crypto would prefer,” said Greg Moritz, Chief Operating Officer of crypto hedge fund Alt Tab Capital.
He noted that further cases would likely provide more clarity on how courts will treat private crypto offerings.
While liquidity remains low for altcoins, it is steadily improving for bitcoin and ether. Turnover for Coinbase stock reached its highest level in 14 months on Thursday, adding weight to a surge that has more than doubled the stock price in a month.
Crypto assets are now trading near or above levels reached during the “crypto winter” following the collapse of the FTX exchange in November last year. FTX’s failure, coupled with global regulatory efforts to rein in the sector, had prompted a slump in the market.
China has effectively banned cryptocurrencies, and the founder of FTX, Sam Bankman-Fried, has been accused of multibillion-dollar fraud by US investigators, to which he has pleaded not guilty.
Alex Mashinsky, the founder of Celsius, also pleaded not guilty to his charges on Thursday. Nonetheless, there are still several legal challenges pending, and market setbacks are expected.
Coinbase and its larger rival Binance are facing lawsuits from the SEC, which they are contesting. Binance is also facing legal action from other regulators. A senior SEC official stated last month that the industry has “an ethos built around non-compliance.”
The entry of traditional finance firms into the crypto space, bringing in large sums of money, has evoked memories of the rally that saw bitcoin surge 300 percent in 2020.
BlackRock, the world’s largest asset manager, recently filed to launch a bitcoin exchange-traded fund (ETF), while exchange operator Cboe refreshed its filing for a similar fund to be managed by asset manager Fidelity.
“For the first time in a while, it’s been consistently positive news coming through, and that means you’ve got momentum,” said Chris Weston, Head of Research at brokerage Pepperstone in Melbourne.
