Mar 23, 2023
Bitcoin Gains as Crypto Unbowed by Latest Regulatory Crackdown
(Bloomberg) -- Bitcoin resumed its push back toward $30,000 and smaller digital tokens rallied as a broad renewal in risk appetite prompted investors to downplay a widening regulatory crackdown.
The oldest cryptocurrency gained as much as 5.2% to trade around $28,812. Bitcoin traded just under $29,000 on Wednesday until the Federal Reserve raise rates as expected. The token, which hasn’t traded at $30,000 since June, has jumped about 70% this year.
“It’s basically an asset that trades on sentiment,” Que Nguyen, Research Affiliates CIO of Equity Strategies, said in an interview at Bloomberg’s New York headquarters. “One of the things I find curious about crypto is that nobody really does anything with it. If there is something to be done with it that affects the real economy, then it’s going to be really big. But if it isn’t, then it’s going to be confined to this enthusiast circle.”
Coinbase Global Inc. disclosed Wednesday that it received a notice from the Securities and Exchange Commission formally declaring the regulator’s plans to bring an enforcement action against the largest crypto exchange in the US. In a separate action on Wednesday, the SEC sued crypto mogul Justin Sun for allegedly violating securities rules. Sun said that the complaint lacks merit.
Among so-called altcoins, Cardano jumped 5.3%, Avalanche rose 6.3% and Litecoin increased 7.7%. TRX, the token associated with the Tron network that Sun started, rose about 7.8% after slumping 12% on Wednesday.
Bitcoin “is basically following the broader markets, digesting the Fed, and basically bringing down some of the damage that was done yesterday,” said Ilan Solot, co-head of digital assets at Marex.
“The crypto market seems to have held a similar view to the bond market coming into the Fed meeting that there was an overwhelming likelihood of a 25-bps hike and a small likelihood of standing pat,” said Stephane Ouellette, chief executive at institutional crypto brokerage firm FRNT Financial.
The rebound in crypto follows an overall recovery in the equity market, where the tech-heavy Nasdaq 100 is leading gains. That index — which crypto tokens have in the past moved in a similar fashion with — is up 17% so far this year, and plenty of analysts still point to the two often trading in tandem. Though the correlation between the two had weakened at the start of the year, it’s become stronger as both rally in the wake of the banking-sector turmoil.
Read more: Record Demand for Derivatives Fuels Bitcoin’s Resurgence
“The move is notable but not excessive,” Chris Newhouse, a derivatives trader at crypto investment firm GSR, said. “A move below $25,000 or above $30,000 probably would’ve seen increased volume in the derivatives markets and more speculative bets start to take place.”
--With assistance from Carly Wanna and Vildana Hajric.
(Updates with Nguyen comment; updates prices throughout.)
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