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Bitcoin (BTC-USD) climbed more than 10% on Friday, joining cryptocurrencies in a large rally of relief as investors applauded constructive remarks from officials on regulating the industry.
Beaten down by developments in China and a volatile risk appetite environment, digital currencies experienced a difficult September. However, this week’s signals from US regulators also appear to have boosted sentiment, sending Bitcoin to its biggest intraday rally since July.
Other cryptocurrencies like Ethereum (ETH-USD), Cardano (ADA-USD) and Dogecoin (DOGE-USD) followed suit, adding at least 6% on the day.
“Traditionally, along with Bitcoin, September is the weakest month, so yes, we are finally out of September,” CryptosRus founder George Tung told Yahoo Finance.
“Plus, there’s a lot going on. Yesterday we had a $ 3 billion option expiration for Bitcoin,” Tung explained. “It could have put the brakes on Bitcoin this past week, but now it’s October and things are looking a lot better.”
Securities and Exchange Commission (SEC) Chairman Gary Gensler reiterated his support for the approval of a Bitcoin exchange-traded fund (ETF) for U.S. investors on Wednesday, even as the agency came under fire for some of his efforts to oversee the crypto industry.
And Federal Reserve Chairman Jerome Powell further allayed the fears of U.S. crypto asset holders by telling Congress he had “no intention” to ban cryptocurrencies, including coins. stable. However, like Treasury Secretary Janet Yellen, he sees a reason to regulate stablecoins.
With Wall Street indices under pressure, the surge in crypto prices suggested a decoupling of stocks and other risk-sensitive assets. Last week, digital coins sank alongside stocks following news that Chinese real estate company Evergrande could be headed for a default or government bailout.
Greater uncertainty hung over the market last Friday, when the Chinese government doubled its crackdown on crypto mining by banning trading in all cryptocurrencies and related services.
“Crypto is rallying today because of regulation,” Matthew Hougan, chief investment officer for crypto asset manager Bitwise, told Yahoo Finance. “We should get used to this phrase because I think you’re going to hear it a lot next year.”
Hougan believes Powell’s clarification, in addition to reports that the Biden administration seeks to regulate stablecoins but not outright ban them, “hailed the market’s worst fears about regulatory scope.”
These fears, Hougan said, held back what would otherwise be a very strong market. “Crypto has so many positive winds right now: the growth of DeFi, the explosion of interest in NFTs, the rise of Web 3.0, the entry of institutional investors, the increase in venture capital investments. Hougan said.
Despite the rapid growth of the crypto industry, traditional US-based institutional investors as well as average Americans are still looking for more secure opportunities to invest in cryptocurrencies.
Bakkt Chairman Adam White told Yahoo Finance that for many institutional investors betting on crypto involves “being exposed to assets like bitcoin.” Financial offerings such as regulated custody of crypto assets and futures allow institutions to enter the industry in ways they feel familiar and secure, White added.
The ETF factor
A Bitcoin ETF presents even greater access, primarily by deepening the links between cryptocurrencies and the U.S. financial sector.
It could also send BTC on another bullish jump. The benefits of a crypto fund are many, Gabor Gurbacs, director of digital asset strategy at VanEck, told Yahoo Finance.
“You are essentially getting the benefits of the US capital markets that are currently not available for Bitcoin and other digital assets,” said Gurbacs, whose team has worked on ETF launch for the past five years.
“With a crypto ETF, you get better price transparency, better transparency of holdings, straightforward tax documents, more liquidity and protections for us,” he added.
Currently, the SEC is reviewing dozens of Bitcoin ETF proposals. Many of their approvals were pushed back to the end of this year.
David Hollerith covers cryptocurrency for Yahoo Finance. Follow it @dshollers.
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For more information on cryptocurrency, see:
Dogecoin, what is it? How to buy it
Ethereum: What is it and how do you invest in it?
The 21 best crypto leaders to watch in the second half of 2021
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