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Bitcoin Surpasses $72,000, Ether Rises on Dencun Upgrade Optimism
Key points
- Bitcoin rose to an all-time high above $69,000 last week and surpassed $72,000 on Monday morning as spot activity in bitcoin ETFs remained elevated.
- MicroStrategy bought more bitcoin, boosting its shares, while Blackrock’s IBIT bitcoin spot ETF continues to see large inflows.
- After the SEC announced a deal with former cryptocurrency exchange ShapeShift, two agency commissioners questioned the lack of regulatory clarity for the industry in the U.S.
- In a congressional hearing, Federal Reserve Chair Jerome Powell indicated that the central bank is nowhere close to implementing a central bank digital currency.
- This week, some of the focus may shift from Bitcoin to Ethereum, as Dencun is scheduled to upgrade to the alternative crypto network.
What happened in the cryptocurrency markets last week?
Bitcoin (Bitcoin) surpassed yet another price milestone, surpassing $72,000 this morning on the back of last week’s price momentum, when it hit two all-time highs. Meanwhile, Ether has climbed steadily above $4,000 amid optimism about lower fees following Dencun’s highly anticipated upgrade to the Etherum network, which will help improve transaction processing speed at scale, this Wednesday .
Meanwhile, two SEC commissioners explained their displeasure with the way the cryptocurrency industry has been regulated in the United States, and Federal Reserve Chair Jerome Powell made clear that there are no immediate plans to launch an initiative central bank digital currency (CBDC) for the US dollar.
Bitcoin hits new all-time high on the back of ETFs
The launch of Spot Bitcoin ETF in the United States, as well as the next one halving event, have been credited for bitcoin’s recent rally multiple all-time highs. However, after each of the highs, the largest cryptocurrency by market capitalization fell significantly before recouping some of these gains.
Bitcoin rose above $72,000 on Monday, perhaps amid optimism over the UK regulator’s softened stance to allow the cryptocurrency publicly traded securities (ETN) in the country.
“The Financial Conduct Authority will not oppose requests from Recognized Investment Exchanges (RIEs) to create a UK-listed market segment for crypto-asset-backed Exchange Traded Notes (cETNs). These products would be available to professional investors, such as corporates investment firms and credit firms, institutions authorized or regulated to operate only in financial markets,” the London Stock Exchange said in a statement.
Blackrock Bitcoin ETF, MircoStrategy are big buyers of Bitcoin
Over the past two months, Blackrock’s iShares Bitcoin Trust (IBIT) has become a major hub of bitcoin trading activity, as its bitcoin supply temporarily grew more than MicroStrategy’s (MSTR) last week. However, on Monday MicroStrategy announced the acquisition of another 12,000 bitcoins, bringing the current balance to 205,000.
Additionally, the nine new ETFs have grown to a larger combined size than the Grayscale Bitcoin Trust (GBTC), according to BitMEX Research. GBTC has seen outflows of more than $10 billion since its conversion to ETFs. Notably, Grayscale’s offering comes with much higher fees of 1.5% than the other nine spot bitcoin ETFs currently on the market.
Bitcoin’s price fuels gains for some cryptocurrency-related stocks
MicroStrategy’s bet on buying bitcoin is paying off spectacularly. MicroStrategy shares rose 16% to about $1,650 in early afternoon trading Monday. The stock is up more than 600% over the past year and is up about 140% since the start of 2024.
According to MircoStrategy Executive Chairman Michael Saylor, the company’s shares are a good option for investors seeking exposure to bitcoin.
“If you’re curious about Bitcoin right now and want to buy Bitcoin at an all-time high, how can you get Bitcoin upside with downside protection? MicroStrategy sold $800 million of debt and we have $12-13 billion of Bitcoin on the balance sheet “Saylor told CNBC in an interview Monday. “If you’re a bitcoin maximalist and you love bitcoin and you want it to last forever, ETFs are charging you 25 basis points, MicroStrategy is stepping up — we’re giving you a return on your shares in a tax-efficient way.”
Coinbase (CURRENCY) is another stock benefiting from the bitcoin rally. Despite problems due to huge trading volumes Over the past two weeks, shares of the cryptocurrency exchange have risen more than 15% over the past five days and have gained around 70% year to date.
SEC commissioners criticize agency’s crypto stance
THE Securities and Exchange Commission(SEC)’s action against former digital asset trading platform Shapeshift has been criticized by the regulator’s own commissioners.
While ShapeShift agreed to pay $275,000 for allegedly facilitating trades in unspecified digital assets considered securities, SEC commissioners Hester Peirce and Mark Uyeda questioned the lack of clarity on which tokens were considered securities. They argue that ambiguity makes it difficult for crypto firms to discern regulatory compliance, potentially stifling innovation.
“Cases like this don’t protect investors; they intimidate innovators and entrepreneurs,” Peirce and Uyeda said. “We respectfully disagree.”
The commissioners’ statement echoes the frustrations of companies like Coinbase AND Krakenwho were also sued by the SEC for operating unregistered stock exchanges.
Fed Chair Powell says there is no reason to worry about CBDC
During congressional testimony last week, Federal Reserve Chair Jerome Powell expressed concerns about the potential development of a U.S. CBDC.
“We are nowhere near recommending or adopting a central bank digital currency in any form,” Powell said.
Powell aimed to quell speculation that a CBDC could allow the Fed to compete directly with private banks or monitor personal financial transactions, stressing that any digital currency initiative would operate through the existing banking system. His remarks come in the context of legislative efforts to prevent the Fed from issuing a CBDC without congressional approval, reflecting ongoing debates over privacy and the implications of central bank-backed digital currencies on the financial landscape.
What to expect from the Ether network upgrade
Ether (ET) has now reached $4,000 for the first time since December 2021, as a network upgrade, known as Deneb-Cancun or Dencun, is expected this week. Ether rose more than 4% on Monday and has gained more than 70% year to date.
According to Fidelity Digital Assets, the upgrade is expected to dramatically reduce fees on various layer two network protocols that were built on the core Ethereum blockchain.