Bitcoin (BTC) price rises as crypto market adds $84 billion in value

Crypto markets rallied on Thursday, shrugging off a tougher regulatory stance from the US government.

Bitcoin rose 11% to $24,655.94 around 3:36 a.m. ET while ether was up more than 8% to $1,684.59, according to CoinDesk.

The value of the entire cryptocurrency market rose more than $84.8 billion in the 24 hours before 3:39 a.m. ET.

There are “increasing signs that the market bottomed last November and has turned bullish,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC.

“We’re gaining momentum here and all the bad news is being shrugged off, typical signs that the market thinks the worst is over.”

Crypto markets were on edge earlier this week following increased regulatory scrutiny from US authorities on digital currencies.

On Monday, the New York State Department of Financial Services told Paxos to stop minting new Binance USD, or BUSD, stablecoins. A stablecoin is a type of cryptocurrency pegged to a real value, and some are backed by assets such as bonds or cash. The BUSD is pegged one-to-one to the US dollar.

Paxos also confirmed that the Securities and Exchange Commission has notified the company that the agency may recommend an action alleging that BUSD is a security. The SEC has not yet formally brought any charges against Paxos.

Bitcoin’s price on Thursday was at its highest level since mid-August 2022. Last year, almost $1.4 trillion was wiped off the crypto market after the turmoil that led to bankruptcies, failures of projects and companies. All this was topped by the collapse of the major stock exchange FTX.

Yuya Hasegawa, an analyst at Japanese crypto firm Bitcoin Bank, said there is a shift from so-called altcoins, or alternative coins, to bitcoin in the wake of regulatory actions.

“Wednesday’s crypto rally was a bit of a surprise, but one thing stood out: it was led by bitcoin,” Hasegawa told CNBC.

“The current regulatory environment certainly looks like a headwind for the crypto market, but it seems that some money is moving from altcoins to bitcoin, as bitcoin is the only cryptocurrency labeled as a ‘commodity’ by the SEC chairman. Accordingly, bitcoin’s market dominance . is on the rise.”

SEC Chairman Gary Gensler reiterated last year that the agency views bitcoin as a commodity rather than a security. Commodities are assets such as gold, while stocks are considered securities. They are regulated differently.

Rising interest rates from the Federal Reserve designed to fight inflation also weighed on crypto markets. Bitcoin is also closely correlated to the stock markets and especially the technology-heavy Nasdaq index. Nasdaq is up approx. 16% so far this year. Bitcoin has outperformed the index and is up 49% this year.

Bullish sentiment in risk assets has been helped by a view that the economic downturn may not be as bad as expected and that the Fed may slow the pace of rate hikes.

“In general, the markets like the fact that inflation is coming down, rate hikes are slated to ease from here, but also that we could end up with either no major recession or something very mild,” Ayyar said.