Despite Regulatory Crackdowns, Bitcoin Climbs 5% Above $28,000

Despite initial fears surrounding possible crackdowns by U.S. regulators on industry giants, Bitcoin's price rose strongly Wednesday as investors grew more willing to take a risk following U.S. regulators' crackdown on industry giants.

‍

In the last 24 hours, CoinGecko data shows that the world's largest cryptocurrency, Bitcoin, has risen by 5% to $28,474 according to CoinGecko. In response to news of the Commodity Futures Trading Commission's lawsuit against Binance earlier on Monday, Bitcoin has regained control of the $28,000 level after dipping below the level on Monday.

‍

The price of cryptocurrency ether, the second largest digital coin, has risen to $1,816.10, up nearly 6% in one day.

‍

Despite the fact that the crypto market collapsed in 2022, which resulted in a sharp slump in prices and a crash of major cryptocurrency exchanges, the price of bitcoin has been steadily increasing over the past year. The U.S. Federal Reserve's interest rate hikes, which have put pressure on risk assets such as stocks, have given investors some comfort that the reversal will be reversed.

‍

Earlier this week, there were no clear indications as to why bitcoin prices jumped, but it is consistent with a broad rise in the markets in the United States, and bitcoin has been known to track movements in equity markets more closely than other assets, which investors consider more traditional risk assets.

‍

It was announced Wednesday morning that the Nasdaq futures were up 100 points, or 0.9%, when the market opened.

‍

The CFTC has launched a lawsuit against Binance and its co-founder Changpeng Zhao, alleging that Binance had violated trading rules by courting clients in the U.S. without authorization and therefore had violated U.S. regulatory laws. Regulators have sharpened their crackdown on crypto firms in recent months.

‍

As one of the alleged violations of securities laws that Coinbase is alleged to have committed, the Securities and Exchange Commission has also threatened to take legal action against the company.

‍

Vijay Ayyar, head of international at crypto exchange Luno, told Trade Algo via email Wednesday that despite the recent volatility, the outlook for Bitcoin remains bullish as it reclaimed $28K and appears ready to target $30K shortly.

‍

There is a well known statement from the CFTC that, “In general, when price action starts absorbing negative news so quickly, it indicates that the market is bullish and trending upwards. The CFTC case against Binance, although of high importance, does not seem to have had a huge impact on the market.”

‍

Earlier in the year, Bitcoin had been back at its peak following the turmoil of the global financial system. The Swiss bank Credit Suisse was recently rescued by its counterpart UBS in a government-backed deal resulting in a significant reduction in its price.

‍

Silicon Valley Bank, a tech-oriented lender based in the US, and Silvergate and Signature, banks focused on cryptography, have also failed.

‍

Bank Term Funding Program, also known as BTFP, is a lending program introduced by the Federal Reserve in order to help banks meet their obligations to depositors in the wake of the banking crisis, in an effort to cushion the blow of the banking crisis.

‍

In times of economic distress, Bitcoin, according to its proponents, may serve as a form of money that people are able to access without having to open a bank account, and as a store of value in times of economic distress.

‍

Despite its extreme volatility, it has been proven that it is capable of swinging up or down 10% in a matter of hours and has been known to do so.

‍

Ayyar told Trade Algo that the market seemed to be putting more weight on macroeconomic factors, including the fact that the Fed has already begun a form of quantitative easing, now dubbed BTFP, but he also hinted that the interest rate pivot might take place sooner than expected."