Bitcoin and other cryptocurrencies shot upward this week amid news of more institutional interest in digital assets.
As of Thursday afternoon, bitcoin had risen above $30,000 — the highest it has been since April. The increase marks an 18.3% increase from a week ago, quick growth for the flagship cryptocurrency, which has been having a much better year than 2022’s disastrous run.
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Bitcoin is up 80% since the start of the year alone.
Ethereum, the world’s second-largest cryptocurrency by market cap, has also boomed over the past few days. It is up more than 18% since last Friday, showing just how much major coins in the cryptocurrency market tend to move in tandem with broader market trends.
Behind the sudden growth this week was a burst of news from Wall Street. BlackRock, the world’s largest money manager, filed paperwork with the Securities and Exchange Commission for an exchange-traded bitcoin fund.
The iShares Bitcoin Trust, if approved, would be the first ETF to have bitcoin as an underlying asset as opposed to futures contracts. Previous applications to the SEC from other money managers have been rejected, though just the application for an ETF shows growing institutional acceptance from such a major Wall Street player.
“Who needs regulatory clarity if you see BlackRock making a move,” said Edward Moya, a senior market analyst for the Americas at OANDA.
There is also excitement around a new cryptocurrency exchange, EDX Markets, which is being financially backed by major institutional firms. Founding investors include heavy hitters such as Charles Schwab, Citadel Securities, Fidelity, and Sequoia Capital, among others.
The exchange, which was launched on Tuesday, allows trades of bitcoin, ethereum, litecoin, and bitcoin cash.
“We are committed to bringing the best of traditional finance to cryptocurrency markets, with an infrastructure built by market experts to embed key institutional best practices,” EDX CEO Jamil Nazarali said. “With the endorsement of our new and growing list of investors and customers, we’re proud to launch trading and look forward to further enhancements to our offering.”
The flurry of news from the major firms bodes well for cryptocurrency, which took a walloping in 2022, culminating in the dramatic collapse of FTX and the jailing of its now-disgraced founder Sam Bankman-Fried.
In mid-December, bitcoin was hovering at about $17,000 — an enormous annual drop from late 2021, when the flagship cryptocurrency hit a record $69,000.
Additionally, the Federal Reserve raised interest rates all last year. Higher rates generally lower the value of risk assets such as stocks — and, this year shows, digital tokens.
In downturns, investors typically flee risky investments in favor of safer and more stable stores of value. Bitcoin and other cryptocurrencies are still a new asset class, and those who have invested in the coins have been selling off their holdings for fear they will crash, resulting in a chain reaction effect.
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The latest rally, though, is buoying optimism among crypto evangelists who have long hoped for greater acceptance of digital assets from the broader financial world.
“Bitcoin’s rally is part of a larger trend signaling a shift towards bitcoin as a distinctly strong and established store of value,” Alex Adelman, CEO of bitcoin rewards app Lolli, told CoinDesk. “Bitcoin’s recent climb to over 50% market dominance in the crypto markets reflects a growing demand for bitcoin among institutional and retail investors as a highly secure, decentralized holding that has proven its value over time.”