The cryptocurrency market capitalization has reached its highest point in the last year. Having started at $840 million on January 1st, the market capitalization and over $1.6 trillion today, which proved to be its resistance level for most of the month.
While the $1.5 trillion mark would only be half of the market capitalization back in November of 2022, it represents a major recovery for a market that has gone through a prolonged bear market. It looks like the bear market is over, but there may be some bumps ahead.
The slow recovery is even more impressive when considering the number of high-profile scandals and increasing regulatory pressure sieging the industry over the past year.
The recovery of the crypto market has been partially attributed by experts mainly to the decision by investment management firms like BlackRock and Ark Invest to file applications to open their Bitcoin ETFs. According to Galaxy Digital CEO Mike Novogratz, this boost could help Bitcoin reach its all-time high once again somewhere in 2024.
Novogratz’s optimism is largely linked to the idea that the increasing number of Bitcoin ETFs could prompt the government to state that the public is “allowed to buy Bitcoin”, which would represent a “pretty successful shift of psychology”.
Bitcoin itself hasn’t been part of the regulatory crackdown on crypto, which has led many experts to believe that the approval of Spot Bitcoin ETFs could be near as “there are a lot of good signs”.
A Nasdaq survey showed in 2022 that about 72% of financial advisors would be “more likely to invest client assets in crypto” if the digital asset were to be approved for a spot ETF product.
Such a decision could not only result in the funds of millions of people around the world being “suddenly” exposed to cryptocurrency but also in a widespread push for cryptocurrency literacy.
Despite having been around for over a decade already, cryptocurrency remains one of the most difficult financial instruments for legislators, investors, and the general public to understand. Not only does the technology possess the same level of abstraction other instruments share but its technological component is one that even tech experts fail to understand.
While some commentators have made a case for legislators finally understanding cryptocurrency, lawmakers continue to disagree on the potential of cryptocurrency and its consequences for national security. Historically, lawmakers have also failed to understand the mechanisms and potential behind technologies like the Internet, social media, and AI.
Lawmakers, however, have been moving swiftly to tackle the issue of crypto regulation over the last semester. Back in July, the “first-of-their-kind stand-alone crypto bills” were being worked on by lawmakers, which would establish legislation for stablecoins and antimony laundering practices, as well as delimit the jurisdiction of regulators in crypto-related matters.
These bills, however, were delayed by internal leadership-related conflicts in the Republican Party and the lack of cooperation by Democrats.
Cryptocurrency is now at a crossroads as institutional adoption and regulatory pressure continue to increase all over the world. The recent crackdowns on Binance and Kraken have once again put crypto in the global spotlight, an event experts have described with optimism and pessimism alike.
Internationally, the cryptocurrency industry has recently suffered the blowback of the Philippine SEC decision to block access to Binance, the Spanish government’s efforts to tax crypto holders, and Hong Kong’s controversy resulting from cryptocurrency-related scams.
This news is a reflection of the growing efforts on the global stage to control the cryptocurrency space more effectively, something that cryptocurrency maximalists have historically pushed against. On the other hand, there are still ways to avoid regulations, which will be impossible to stop.