Bitcoin has made a triumphant return, surging to the trading point it held prior to the catastrophic TerraUSD stablecoin collapse that sent shockwaves through the cryptocurrency world. After enduring a challenging 18-month journey, the dominant cryptocurrency soared as high as 4% to reach $37,019 on Thursday, marking its highest value since May 5, 2022. This milestone comes nearly one year after the bankruptcy filing of Sam Bankman-Fried’s FTX exchange.
“With Bitcoin now trading above the level it was at when the Terra stablecoin imploded, crypto traders appear to have officially moved beyond the psychological scars of the past,” commented Markus Thielen, Head of Research at Matrixport.
Unlike previous bull markets, Bitcoin’s recovery this year has been characterized by fits and starts, punctuated by sharp advances and prolonged periods of low volatility. Overcoming the Federal Reserve’s most significant monetary tightening in four decades and increasingly stringent industry regulations, Bitcoin’s resurgence has been guided by various narratives. It was portrayed as a hedge against inflation, a refuge from the US banking crisis in March, and most recently, as a potential investment for the masses through the anticipated approval of exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC).
The crypto world is currently awaiting the SEC’s decision on ETF approval, with a brief window of at least eight days opening on Thursday for the regulator to issue potential approval orders. According to Bloomberg Intelligence analysts James Seyffart and Eric Balchunas, even if approvals do not arrive this month, there is a strong 90% chance of approval by January 10. The prospect of SEC approval has boosted Bitcoin by over 120% this year, generating sustained interest in bets on further Bitcoin rallies, as noted by Caroline Mauron, co-founder of digital-asset derivatives liquidity provider Orbit Markets.
This resurgence represents a departure from the shadow of individuals associated with some of Bitcoin’s major past failures. Sam Bankman-Fried, once hailed as a crypto savior, recently faced a conviction for one of the largest financial frauds in US history, and now awaits a potentially lengthy prison sentence. Meanwhile, Do Kwon, the South Korean inventor of the ill-fated TerraUSD, has found himself incarcerated in Montenegro and is wanted by both US and South Korean authorities on fraud charges. FTT, the native token of the FTX exchange, has surged nearly 90% in the past 24 hours, as hopes rise for the exchange’s potential revival.
Crypto enthusiasts have been crafting fresh narratives to bolster Bitcoin’s renewed strength. Josh Gilbert, a market analyst at trading and investing firm eToro, emphasized the ETF expectation as the foremost catalyst, extending the current rally. Additionally, the belief that the US Federal Reserve has concluded its rate hikes for the time being and an upcoming Bitcoin-halving event next year have also contributed to the rally’s momentum.
While Bitcoin has made substantial progress, it is still only halfway towards reaching the heights of the 2021 crypto mania, when it briefly peaked at nearly $69,000. JPMorgan analyst Nikolaos Panigirtzoglou expressed skepticism, suggesting that the current crypto rally may be “overdone.” Rather than fresh capital flowing into the crypto industry through newly-approved ETFs, JPMorgan envisions existing capital shifting from Bitcoin products such as the Grayscale trust and Bitcoin futures ETFs.
In conclusion, the resurgence of Bitcoin to its pre-crash trading point represents a remarkable comeback, signaling renewed optimism and potential for further growth in the cryptocurrency market.
Source: Bloomberg
