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Anyone else feeling the changing crypto atmosphere?
Are cryptocurrencies back? It seems like every couple of weeks there’s a headline that says bitcoin (BTC) and ether (ETH) they are exchanging hands at prices not seen since 2021, when the cryptocurrency market was recovering. It is not obvious that price appreciation will stop anytime soon; things seem different this time.
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The pandemic-era bull market was a time of mass exuberance, hysteria and fun. Everyone from Elon Musk to my mother seemed to be talking about cryptocurrencies. Celebrities endorsed meme coins and purchased NFTs. Cryptocurrencies have become a cultural touchstone: perhaps the best indicator of an economy going through wild turbulence as the post-pandemic world began to reopen, a strange time dominated by “vibrations”.
By comparison, the market’s latest recovery was uneventful. Sure, some friends have reached out to see if they should buy bitcoin, an anecdotal indicator that suggests growing retail interest. But overall, it seems like very few people have noticed the rise in cryptocurrency prices.
Of course, following the wave of protocol failures and business failures in 2022, starting with high-profile implosion of the Earth and culminating in the collapse of FTX, cryptocurrencies have become toxic to talk about. The same level of enthusiasm and lightheartedness is difficult to find while still experiencing a hangover.
There are a number of indicators beyond price action that suggest the cryptocurrency market rebound has begun in full force. MetaMask, the primary means of accessing the Ethereum network, is nearing its end all-time high in monthly active users (30 million); Coinbase, the largest US cryptocurrency exchange, recorded its first profitable quarter in two years with the recovery of trading volumes; and bitcoin research interest is picking up (a bit), according to Google Trends.
A number of factors could contribute to increased interest. THE bitcoin halving, an event that occurs approximately every four years, is always a popular topic in the media. Meme coins and token launches fuel the idea that the cryptocurrency industry prints free money. Approvals from people like BlackRock CEO Larry Fink and even government bodies, in places like Hong Kong and the United Arab Emiratesthey foster the sense that cryptocurrencies are technologically significant.
Furthermore, there is a growing sense that the worst may be over for cryptocurrencies, from a legal perspective. Big outstanding concerns have more or less been resolved, often in favor of cryptocurrencies. The Department of Justice solved with Binance, imposing a severe financial penalty, but one of the world’s largest stock exchanges appears capable of sustaining. The U.S. Securities Exchange Commission’s hostile attempt to “regulate through enforcement” was thwarted after Ripple won a significant legal battle in court, and as the agency faces more tough court battles. And FTX’s bankruptcy process is wrapping up, with full restitution expected for all former users.
Increasingly, governments, including in the United States, appear to be working with industry to develop policies that protect consumers without hindering the development of cryptocurrencies. The European Union has approved the important MiCA set of rules while the UK, Hong Kong, Nigeria and others are all vying to become crypto “hubs”.
It is both dangerous and stupid for journalists to try to predict the future, especially in a volatile and rapidly evolving industry like cryptocurrency. There is no guarantee that the bitcoin rally will continue and there is always the possibility that fortunes will reverse. But there is definitely a growing sense that cryptocurrencies are at their peak.