On Monday, Bitcoin (BTC-USD), the primary cryptocurrency, exceeded $42,000, hitting a yearly peak and appearing to overcome recent scandals that cast a shadow on the digital assets market.
Recent weeks have seen a boost in investor optimism, leading to an increase in the value of digital tokens and shares of crypto companies. Backers are keenly eyeing the possibility of regulators approving a crypto exchange-traded fund (ETF), which would provide investors with more significant exposure to digital assets while mitigating the full ownership risk. The Securities and Exchange Commission is anticipated to make decisions on these applications next month.
In the current year, Bitcoin has experienced a remarkable surge of over 150%, influencing the rise of other tokens and players. Ethereum, the second-largest cryptocurrency by market cap, has also seen a substantial gain of more than 80%.
Profits are extending to publicly traded companies in the sector as well. Coinbase (COIN), which thrived during the active trading period of the COVID lockdown, is currently experiencing another surge. The platform’s stock price has surged over fourfold since the beginning of the year. Meanwhile, Marathon (MARA), the digital asset company engaged in cryptocurrency mining, has seen its stock price more than tripled year to date.
Markus Thielen, head of research at DeFi Research.com, shared with Yahoo Finance Live that the potential approval of ETFs could propel Bitcoin’s price close to $60,000. This forecast is based on the expectation that investors, including institutional ones allocating significant funds into ETFs, might redirect a portion of those funds into the crypto space, leading to substantial gains.
Markus Thielen pointed out that with approximately $120 billion in precious metals ETFs in the US (including gold and silver), shifting just 10-20% of those funds into Bitcoin could result in an inflow of around $25 billion. This illustrates the potential impact of a modest reallocation from traditional assets to the cryptocurrency market.
The growing belief on Wall Street that the Federal Reserve has likely concluded its interest rate tightening efforts, coupled with pent-up demand, is contributing to the upward trend in the crypto market, according to Thielen.
The late-year rally in the crypto market underscores what industry leaders perceive as the sector shedding its troubled history. Notably, last month saw Changpeng Zhao, founder of Binance, the world’s largest crypto exchange, pleading guilty to federal money-laundering charges and stepping down as CEO. This followed the high-profile conviction of FTX co-founder Sam Bankman-Fried.
In a significant turn of events, a Manhattan federal jury found Sam Bankman-Fried guilty last month, accusing him of defrauding customers, investors, and lenders. This marked a dramatic downfall for the 31-year-old entrepreneur. Beyond his personal situation, his conviction took on broader significance, symbolizing critics’ concerns about the crypto industry’s potential for scams and illicit activities, especially in the aftermath of the largest crypto collapse in history.
Despite Bankman-Fried facing additional legal challenges, the markets seem to be swiftly moving forward.