Market prices across the board saw a crypto recovery on Wednesday, propelled by a favourable court decision that supported Grayscale’s Bitcoin ETF application. The court’s ruling has also prompted the U.S. Securities and Exchange Commission (SEC) to reconsider its prior rejection of the application. Hence, the question “is crypto dead?” has been quiet for some time. Let’s delve into the intricacies of the crypto markets!
Bitcoin, Ether, and Other Major Cryptocurrencies Surge in Asian Trading
In the Asian trading session on Wednesday, Bitcoin, Ether, and all other top 10 non-stablecoin cryptocurrencies registered gains. Traders rejoiced as Grayscale, the digital currency asset manager, secured a victory against the U.S. Securities and Exchange Commission (SEC). This market rally follows the previous week’s significant outflows of digital asset investment products. In fact, it was the largest outflow since March. The market’s unusually low trading volume has also contributed to this momentum. Meanwhile, within the non-fungible token (NFT) sector, the Forkast 500 NFT Index saw a decline as traders assessed recent SEC charges against an NFT project operated by media company Impact Theory for violating securities laws.
Crypto Recovery: Bitcoin Surpasses $27,000 Mark, Ether Posts Gains
Bitcoin witnessed a remarkable 5.54% increase, reaching $27,434 within a 24-hour period by 4 p.m. in Hong Kong. This surge has brought its weekly gains to 5.32%, according to data from CoinMarketCap. The world’s largest crypto bubble had been trading below $27,000 since August 18, a trend attributed to the impact of macroeconomic developments in the United States and China on the crypto market. In a parallel move, Ether, the second-largest cryptocurrency globally, recorded a gain of 4.31%, reaching $1,717 and marking a weekly increase of 4.45%.
Crypto Market Momentum Follows Grayscale’s Victory Amid Regulatory Challenges
A favourable ruling in Grayscale Investments is going through a legal battle with the SEC. Besides, all other top 10 non-stablecoin cryptocurrencies also experienced price increases. This market boost coincides with a record-breaking outflow of digital asset investment products the previous week. If truth be told, it totalled an impressive $168 million. The European cryptocurrency investment firm CoinShares has reported this impressive outflow. The outflow counts as the largest since the regulatory crackdown on exchanges in March
Market Dynamics Affected by Regulatory Uncertainty
CoinShares, in a report released on Tuesday, noted that August’s outflows have now reached a staggering $278 million within a market characterized by exceptionally low trading volumes. Investment products totalling $1.3 billion were traded for the week, representing a 16% decrease from the yearly average. This downturn in sentiment, CoinShares suggested, is largely due to the growing realization that the approval of a spot-based Bitcoin ETF in the U.S. might take longer than anticipated. The recent announcement of delays by the SEC has contributed to this perception.
Crypto Banks Respond to Court Ruling Overturning SEC’s Decision
Wednesday saw a resurgence in the crypto bear market, driven by the District of Columbia Court of Appeals’ reversal of the SEC’s earlier decision. This reversal allows Grayscale’s Bitcoin Trust (GBTC), represented by its ticker GBTC, to be converted into an exchange-traded fund (ETF). Grayscale initially filed a lawsuit against the SEC in June 2022, alleging that the regulatory body had not provided sufficient explanations for rejecting its ETF application. The company further contended that the SEC’s refusal was inconsistent with its approach to other applications for Bitcoin futures ETFs.
Positive Developments Offer Hope Amid Regulatory Challenges
Shivam Thakral, the CEO of Indian digital asset exchange BuyUcoin, commented on the market reaction to Grayscale’s victory. He highlighted that the digital asset industry’s growth is hampered by a lack of a clear regulatory framework. This court ruling has ushered in a wave of positive sentiment that is supporting the crypto recovery, which has long struggled with stringent regulations and a bearish market. Thakral expressed optimism that Grayscale’s approval for a Bitcoin ETF could set a precedent for similar financial products globally.
Significant Shift in Digital Assets Evident, But Clarifications Required
Caroline Bowler, CEO of Australian digital asset exchange BTC Markets, underscored the significance of Grayscale’s legal victory against the SEC, indicating a notable shift in the digital asset landscape. However, she emphasized that the court’s ruling isn’t an endorsement for transforming Grayscale’s fund into a crypto recovery for Bitcoin.
