Bitcoin’s remarkable resurgence beyond legal setback

Category: Blockchain Crypto Fintech

In a surprising turn of events, Bitcoin is experiencing a robust resurgence, defying the recent setbacks faced by two major figures in the cryptocurrency industry.

Despite the legal challenges that led to criminal prosecutions against Changpeng Zhao and Sam Bankman-Fried, former heads of Binance and FTX exchanges, Bitcoin has surged approximately 160 percent this year, reaching a 20-month high of $44,000. This resurgence signals a potential turning point for the cryptocurrency, with bulls anticipating a flow of capital from Wall Street.

Shifting Dynamics and regulatory optimism

Speculators and investors are now expressing confidence that the harshest regulatory measures are behind Bitcoin, paving the way for acceptance by large global fund managers and investment banks.

Ed Hindi, Chief Investment Officer at Tyr Capital, notes the resilience of Bitcoin despite legal challenges, stating, “the old guard is being replaced by fresh money.” The recent surge aligns with a broader market trend, where investors are turning to growth stocks and riskier assets in anticipation of central banks cutting interest rates.

CK Zheng, Co-founder and CIO at ZX Squared Capital, goes beyond Federal Reserve rate cuts, attributing Bitcoin’s fundamentals to the entry of highly regulated companies into the market. The optimism surrounding Bitcoin’s future is palpable, with some even envisioning the beginning of a new supercycle. Bernstein, a prominent US investment bank, predicts a potential tripling of Bitcoin’s value to $150,000 by 2025.

SEC’s potential approval of Bitcoin ETFs

A pivotal moment for Bitcoin enthusiasts lies in the possible approval by the Securities and Exchange Commission (SEC) for exchange-traded funds (ETFs) directly investing in the cryptocurrency. The market has long awaited a Bitcoin ETF as a means to tap into the vast U.S. retail investor base. Notably, well-known names like BlackRock and Franklin Templeton have filed applications, raising hopes for wider crypto adoption.

A decision from the SEC is imminent, and if approved, it could provide a more stable support system for Bitcoin prices compared to previous volatile rallies.

The market’s renewed confidence is underscored by continuous inflows into digital asset products, with 10 consecutive weeks of investment growth following Grayscale’s legal victory over the SEC. Optimists believe that the potential approval of Bitcoin ETFs will mark a true recognition of Bitcoin, signalling a more sustained rally.

Bitcoin’s path forward

While optimism abounds, doubts linger over the durability of Bitcoin’s rally. Some major players, such as Vanguard and State Street, have not filed for a spot Bitcoin ETF, expressing skepticism about the investment case for crypto. Additionally, the SEC’s ongoing scrutiny of illicit behavior in sub-sectors and outstanding cases against major exchanges like Binance and Coinbase raise questions about the regulatory landscape. Industry insiders and skeptics alike are cautious about whether the SEC will break its historical pattern and approve a Bitcoin spot ETF.

As the crypto market charts a course through uncertainty, industry participants express hope that this rally marks a departure from the turbulent past rather than signaling the start of another astronomical price spike.  Bitcoin’s resilience and the evolving dynamics with Wall Street and regulators indicate a complex but potentially transformative phase for the cryptocurrency.

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