Will The Crypto Sector Pump Or Dump In The New Year?

When cryptocurrencies emerged, the world thought it had a new secure, decentralized and transparent way to make financial transactions.

Based on blockchain technology, the security and transparency angles were covered. However, it took a while for today’s crypto giants to get global recognition and popularity.
Even the biggest names aren’t immune from being affected by laws, regulations and market fluctuations. This includes the poster boy of crypto, Bitcoin.

So, what’s new with Bitcoin and what problems is it facing? Let’s explore!
 

What’s Happening With Bitcoin?

 

• Today, Bitcoin is the biggest name in the cryptocurrency market and yet people remain in awe of how the price of one bitcoin went from $0.09 in 2010 and not going above $0.40 throughout the year, to its all-time high of $69,000 in November 2021.

• In fact, 2010 saw one owner offering 10,000 bitcoins for 2 pizzas. In 2021, that would’ve been worth $690,000,000!

• Since then, Bitcoin slumped to lower amounts until it reached $45,922 on January 2, 2024, which became its highest level since April 2022. Yet, within the next two days, it slid down 7% to $42,689.

• It isn’t just Bitcoin that fell, with Ether (6%), Solana (7%), XRP (6%), Litecoin (10%) and Dogecoin (9%) all losing value.

• Coming back to Bitcoin, investors believe that some points of concern stem from the possibility that the US Securities and Exchange Commission (SEC) wouldn’t approve a spot bitcoin ETF this year. In contrast, an anticipated approval of a spot bitcoin ETF is believed to be a contributing factor to the surge in Bitcoin’s value.

• ETF stands for exchange-traded fund (ETF). A spot bitcoin ETF tracks the underlying asset and reflects its price directly, allowing investors exposure to the token without having to buy the digital currency.

• Reportedly, Goldman Sachs is in talks with BlackRock and Grayscale to be an authorized participant for the spot bitcoin ETF the two are looking to launch, if the SEC approves them.

• However, a report by Matrixport casts shadows over the possibility of an approval, saying “SEC Chair Gensler is not embracing crypto in the U.S., and it might even be a very long shot to expect that he would vote to approve bitcoin spot ETFs,” adding, “An ETF would certainly enable crypto overall to take off, and based on Gensler’s comments in December 2023, he still sees this industry in need of more stringent compliance.”

This comes as no surprise, considering the year has been embroiled in calls for stricter regulation and standardization crackdowns, especially in the US.
   

What Happened In The US?

 

• After the collapse of FTX and its sister firm Alameda Research, authorities amped up their efforts to counter bad practices.

• The year saw the SEC sue several crypto companies, racking up five high-profile lawsuits.

• The strict crackdown witnessed Binance being ordered to pay out over $4 billion to US authorities to settle multiple criminal charges, while its former CEO Changpeng Zhao ultimately pleaded guilty to money laundering charges and blending customer assets with company funds.

• Ahead of this, the SEC sued Kraken crypto exchange for failing to register with the regulator.

• Furthermore, the SEC also accused Coinbase of engaging in illegal securities, alleging that at least 13 crypto assets offered to its customers should be considered securities and should be subject to strict transparency and disclosures.

 

How Did Crypto Companies Pushback?

 

• Of course, crypto companies pushed back, as some threatened to leave the country. Coinbase’s CEO Brian Armstrong mentioned the company might be forced to relocate its headquarters to somewhere outside the US. Eventually, Armstrong backed off from the threat.

• At the same time, those engaged in the sector hope for more clarity in the form of new regulations going forward.

• According to Alyse Killeen, Managing Partner of Stillmark Capital, “Clearer regulatory frameworks and stance from regulators globally have provided a sense of legitimacy and security, encouraging more widespread participation in the bitcoin market.”

 
The crypto market has seen regulators across the globe pick up their efforts to regulate the sector. From Europe to Asia, various countries have passed laws with strict penalties. However, the US remains the only country to have taken strict action against large crypto companies and projects.

Do you think the SEC and other US-based regulatory authorities are correct in their bid to enforce security and transparency requirements? Do you think it will lead to other markets enforcing stricter regulations on cryptocurrency businesses?

Let us know in the comments below!