The News
All eyes are on bitcoin as the cryptocurrency reached its highest price in 20 months on Monday.
The cryptocurrency hit $42,000 on Monday, up 20% over the last month ,signaling that regulatory scrutiny of the industry is fading after the downfall of crypto giants FTX and Binance. Investors are also keen about regulators allowing a bitcoin exchange fund on the stock market.
Amid geopolitical uncertainty and likely interest-rate cuts, crypto backers are seeking alternative assets like bitcoin and gold — which is also at a record high of $2,100 an ounce.
SIGNALS
Analysts are conflicted about what new Security Exchange Commission (SEC) changes to bitcoin trading would mean for the stability of its price. The SEC is expected to greenlight one or more spot bitcoin exchange-traded funds (ETFs), which allow ordinary investors to track bitcoin’s price without holding the asset and make it easier for them to trade in the cryptomarket. Exposing bitcoin “to a much wider swath of market participants” would help stabilize the price, one proponent of the move told Coindesk. More investors would counterbalance the small number of bitcoin “whales” who own a large amount of the currency and can disproportionately influence its price. However, another analyst argued that the “potential cash creation” structures of spot EFTs would increase bitcoin’s price volatility.
One world leader who celebrated the bitcoin price surge was El Savador President Nayib Bukele. He took the opportunity to hit back at critics who had ridiculed his 2021 decision to declare bitcoin as legal tender, calling them to apologize for reporting that the country was incurring massive losses as he kept investing in the currency while it was losing its value. According to El Salvador’s bitcoin portfolio tracker, the 2,762 coins Bukele has obtained now have a value of over $115 million, resulting in a profit of $3.6 million if Bukele were to sell. But, “we have no intention of selling,” Bukele said on X, adding that future price fluctuations would not affect the country’s “long-term strategy.”
Experts are warning of “a crypto-yuan hostile takeover” from China as bitcoin’s value surges and the U.S. dollar buckles under inflation. Governments, including U.S., allies are becoming increasingly frustrated with Washington’s power to shape fiscal policy despite the dollar’s weakening value, and are turning to BRICS – the main rival to the G7 – “to avoid Uncle Sam’s heavy hand and freedom to snoop on all their financial dealings,” investors Jay Newman and Richard Carty write for the Financial Times. As crypto becomes more valuable, the Chinese Communist Party is pouring in millions to turn Hong Kong into a new global crypto hub, risking making the island’s exchanges opaque to the West’s scrutiny. If the U.S. doesn’t offer an alternative, then CCP-driven crypto adoption could become the “new standard” while the “incumbent global settlement system will have escaped US control for good.”