About two years ago, cryptocurrency prices reached their peak, with Bitcoin (BTC) nearly hitting $70,000. Subsequently, the situation took a turn for the worse, descending into a cascade of setbacks, particularly after FTX’s incident, causing BTC to plummet towards $15,000.
You likely recall this period.
Throughout most of 2023, prices experienced a recovery, though these gains seemed hard-fought, marked by rallies swiftly followed by setbacks. By mid-October, Bitcoin hovered around $27,000.
Then, a sudden market surge occurred, propelled by optimism surrounding bitcoin ETFs and declining interest rates. Recently, Bitcoin surpassed $45,000 on Coinbase, barely surpassing the $40,000 threshold achieved just a few days prior, a level last witnessed in early 2022.
On Tuesday, a crypto-skeptic friend messaged me, expressing an intent to purchase more bitcoin. Additionally, a colleague mentioned hearing increased inquiries about crypto. Will this trend endure? Is crypto once again heading towards mainstream acceptance?
To the dismay of my father, who has sought my market forecasts over my two-decade career in finance, I must admit I have no answers. However, it has been two years since the mood in crypto markets exuded such enthusiasm—prior to the collapses of Celsius, Voyager, Three Arrows Capital, FTX, Genesis, and others.
FOMO (fear of missing out), possibly combined with a dose of YOLO (you only live once), appears to be making a comeback.
The influx of enthusiasm into the market is not difficult to comprehend. The attempt by Wall Street giants like BlackRock, Fidelity, and Franklin Templeton to list bitcoin ETFs in the U.S. is a significant development. If approved by regulators, individuals with regular brokerage accounts could easily access these products. This is likely a more accessible and realistic option for the average American compared to navigating a Coinbase account or dealing with decentralized exchanges and MetaMask.
The marketing and sales influence of BlackRock, Fidelity, and Franklin Templeton seems poised to support bitcoin ETFs, potentially bringing a substantial amount of money into the crypto space. Whether this will lead to a sustainable rally remains a matter of debate.
Other thoughts on my mind include:
A ROCKY DEBUT: Following the troubles at FTX, concerns arose about its larger counterpart, Binance. Recent developments revealed that Binance agreed to a $4.3 billion settlement for multiple U.S. investigations. Changpeng “CZ” Zhao stepped down as CEO. Despite preconceived anxieties, the industry appears to be taking this in stride. The new CEO, Richard Teng, had a less-than-smooth public debut, coming across as evasive on several issues, raising the question of whether traders are concerned about the world’s largest crypto exchange being opaque.
CRYPTO’S BEST CORRELATION: The market continues to witness the peculiar correlation between Elon Musk’s actions or statements and the movement of dogecoin (DOGE), the meme coin he has long admired. Recently, a regulatory filing revealed Musk’s attempt to raise $1 billion for his AI initiatives, causing an immediate surge in DOGE. This remains one of the market’s most unusual correlations.