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Bitcoin (BTC) has surged by 70% since the beginning of 2023. Despite succumbing to the bears during early March with BTC teasing sub-$20,000 levels, it rose back above $28,000 in such a spectacular fashion that it even had the crypto veterans in disbelief. While such eye-catching moves are not new in the crypto space, what’s interesting is how it can happen in the midst of a bear market even worsened by regulatory attacks.
Now, let’s take a step back and look at what has happened in the recent past. It was not very long before the entire crypto market was shattered by the collapse of FTX exchange, one of the world’s largest at that point, raising deep concerns over the legitimacy of crypto companies in general. It further led to a widespread panic which involved billions of outflows from major crypto exchanges all over the world. Many believed this FTX debacle could set back adoption of crypto many years behind.
Second, the US Federal Reserve has been hawkish all along the way in curbing inflation which got out of hand affecting financial markets all over the world. The Fed has been raising interest rates constantly only until very recently they had hinted at a pullback from it. Markets responded accordingly which was evident from 2023 January's move by BTC. However, economies have been in a downtrend with massive layoffs happening across many firms (even tech giants like Microsoft, Google etc) and is expected to follow through the 1st quarter of 2023.
On the other hand, Kraken exchange was dragged to a lawsuit by the Securities and Exchange Commission (SEC) which ended up in Kraken shutting down its crypto-staking services (ironically popularizing decentralized staking services at the same time) and paying $30 million as penalty. Next in line was Binance USD (BUSD), a digital asset that Paxos issues and lists. SEC claims BUSD is an unregistered security. BUSD is a stablecoin pegged to the dollar on a one-to-one ratio.
And one after another, like a pack of tumbling cards, SEC announced charges against crypto asset entrepreneur Justin Sun and three of his wholly-owned companies, Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. (formerly BitTorrent), for the unregistered offer and sale of crypto asset securities Tronix (TRX) and BitTorrent (BTT). The SEC also charged Sun and his companies with fraudulently manipulating the secondary market for TRX through extensive wash trading.
Now, the latest entity to come under regulatory heat once again is Binance. The Commodities Future Trading Commission (CFTC) charged Binance, its CEO Changpeng Zhao, and the company’s former chief compliance officer Samuel Lim with a long list of regulatory violations. One of CTFC’s major claims is that Bitcoin (BTC), Ethereum (ETH) and Litecoin (LTC) are all commodities.
Despite the hard-hitting bearish sentiments created by a long list of regulatory crackdowns, interest rate hikes, insolvency of multiple banks, BTC has managed to stay relevant in the grand scheme of things. It is important to take a step back and understand that panic-struck investors are looking to try out a new avenue like BTC to safeguard their cash. Although, at this point, it’s entirely a hypothesis, BTC may very soon decouple from typical wall-street safety mechanisms (like Quantitative Easing) as was evident post the crash of Silicon Valley Bank (SVB) and likes of many.
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Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.