April 13, 2024

Bitcoin starts 2024 with another rally

Bitcoin (BTC-USD) started 2024 with another rally, rising above $45,000 for the first time since April 2022.

The new surge in the world’s largest cryptocurrency — which began on Monday night — is due largely to excitement about a series of spot bitcoin exchange-traded funds that could receive approvals this month.

The Securities and Exchange Commission is expected to rule by Jan. 10 on applications from 12 money managers that hope to launch the ETFs, which would allow everyday people to get exposure to bitcoin without having to own it.

The applicants include some of the biggest names on Wall Street, from BlackRock (BLK) to Franklin Templeton (BEN). The SEC has in the past denied such applications, arguing the products were vulnerable to market manipulation.

Photo by: STRF/STAR MAX/IPx 2022 5/16/22 An Blackrock sign is seen in New York City.

BlackRock’s headquarters in New York City. (STRF/STAR MAX) (STRF/STAR MAX/IPx)

Those in the industry say there are signs that regulators won’t stand in the way this time around and will instead give the green light to all applicants at once.

“Wishful thinking has long been a characteristic of the crypto industry, especially regarding SEC approval of Bitcoin spot ETFs,” Ian Katz, a managing director with financial regulatory advisory firm Capital Alpha, said in a Tuesday note.

“That hasn’t worked out so far. But recent activity suggests that the SEC will finally stop saying no.”

Bitcoin did give up some of its gains over the course of Monday but was still up more than 2% over the last 24 hours as of 4 p.m. ET. The total market capitalization for all crypto assets was up 3% to $1.73 trillion as of Tuesday at 2:30 p.m. ET, according to CoinMarketCap.

Several other cryptocurrencies and bitcoin-related stocks rode the same momentum Tuesday before also giving back some of their gains. Software firm MicroStrategy (MSTR), a corporate holder of bitcoin, ended up more than 9% and bitcoin miner Riot Platforms, Inc. (RIOT) was down slightly.

Coinbase (COIN), the largest US cryptocurrency exchange, was down nearly 10%.

Bitcoin is still far from its all-time high of $68,789 set in 2021, a year it benefitted from a period of low interest rates and fiscal stimulus that put excess savings in the pockets of investors.

The market crashed in 2022 as rates rose and the giant crypto exchange FTX collapsed, before making a surprise comeback during 2023.

Bitcoin rose 164% last year as optimism about the arrival of ETFs surged due to a filing by BlackRock and a court decision in favor of another ETF applicant, Grayscale Investments.

The bull case for 2024 is that many of crypto’s biggest problems are now officially in the rear-view mirror after the criminal conviction of FTX founder Sam Bankman-Fried and a guilty plea from Binance CEO Changpeng Zhao.

FILE - FTX founder Sam Bankman-Fried leaves Manhattan federal court, June 15, 2023, in New York. A second trial of Bankman-Fried on charges not in the cryptocurrency fraud case presented to a jury that convicted him in November is not necessary, prosecutors told a judge Friday, Dec. 29, (AP Photo/Bebeto Matthews, File)

FTX founder Sam Bankman-Fried. (Bebeto Matthews/AP Photo, File) (ASSOCIATED PRESS)

Investors are optimistic the industry is poised for wider acceptance and regulatory clarity from Washington.

They are also excited about bitcoin’s “halving” in April, a once-in-every-four-years event that reduces the daily issuance of the cryptocurrency by half — and typically results in another bull run.

David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.

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