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Cryptocurrencies are having a major moment in 2023
Bitcoin (BTC-USD), the dominant cryptocurrency, it topped $42,000 on Mondayhitting a yearly high and seemingly overcoming a recent string of scandals that have weighed heavily on digital assets.
Investor sentiment has become more optimistic in recent weeks, driving up the value of digital tokens and crypto company stocks. Supporters are particularly interested in the possibility of regulators approving a cryptocurrency exchange-traded fund, giving investors greater exposure to digital assets without the complete risk of owning them directly. The Securities and Exchange Commission is expected to consider the requests next month.
So far this year, bitcoin is up more than 150%, bringing other tokens and players alongside it. Ethereum, the second largest cryptocurrency by market capitalization, rose more than 80%.
Gains are also flowing to publicly traded companies in the sector. Coinbase (CURRENCY), which benefited greatly during the heady trading days of the COVID lockdown, is enjoying another moment in the sun. The platform’s share price has increased more than fourfold in value since the beginning of the year. And Marathon (MARA), the digital asset company that mines cryptocurrencies, has more than tripled its stock price since the beginning of the year.
Markus Thielen, head of research at DeFi Research.com, recently told Yahoo Finance Live that ETF approvals could push bitcoin’s price near $60,000, as investors move some of their funds into cryptocurrencies. Since institutional investors invest hundreds of billions in ETFs, moving even a small percentage of those funds would result in significant gains, he said.
“There’s about $120 billion in precious metals ETFs in the US, so that means in gold and silver, and if you just move 10-20% of that and move it into Bitcoin you have something in the $25 billion range of influx,” Thielen said.
Bitcoin’s rally shows that investors may be over recent cryptocurrency scandals. (STRF/STAR MAX/IPx 202/AP) (STRF/STAR MAX/IPx)
The increasingly popular belief on Wall Street that the Fed will be done with its interest rate tightening campaign, as well as pent-up demand, are also driving cryptocurrencies’ run-up, he said.
The year-end cryptocurrency rally also highlights what industry leaders say is the sector shedding its troubled past. Last month, Changpeng Zhao, the founder of the world’s largest cryptocurrency exchange, Binance, pleaded guilty to federal money laundering charges and resigned as CEO. The appeal came on the heels of the high-profile conviction of FTX co-founder Sam Bankman-Fried.
Last month, a federal jury in Manhattan found Bankman-Fried guilty of defrauding his clients, investors and lenders. capping a dramatic fall for the 31-year-old entrepreneur. But as he presided over the biggest cryptocurrency crash in history, his belief took on a deeper meaning, superseding what critics saw as the industry’s propensity for scams and illicit activity.
The story continues
As Bankman-Fried faces even more legal battles, markets are already moving.
Hamza Shaban is a reporter for Yahoo Finance covering markets and economics. Follow Hamza on Twitter @hshaban.
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