The cryptocurrency industry, which is fighting regulatory concerns, saw a wave of good news this week, culminating with the price of bitcoin surging back above $30,000.
The value of the most popular digital currency in the world increased by 5%, temporarily surpassing $30,000 for the first time since mid-August.
The price of bitcoin has risen by almost 80% this year, however it is still significantly lower than its all-time high of around $69,000 reached in November of 2021.
The price of bitcoin has been volatile this summer, moving between $18,000 and $25,000 as investors considered the effects of rising interest rates and the crypto industry’s conflicts with regulators.
The decision by the SEC on Thursday to withdraw charges against two executives from blockchain company Ripple Labs in relation to the selling of its XRP coin was the primary factor in the rise on Friday.
The crypto industry, which is fighting the SEC on numerous fronts in the courts, celebrated the decision as a triumph.
By 2020, the SEC had filed a lawsuit against Ripple Labs co-founders Chris Larsen and Brad Garlinghouse, alleging that their sale of XRP tokens constituted an unregistered offering of securities.
Some allegations were resolved in favor of Ripple after the presiding judge, Analisa Torres, decided in mid-July that XRP was not a security when marketed to the general public. While she concluded that institutional investors were targeted, she ultimately dismissed an appeal by the SEC.
In light of the pending allegations regarding Ripple’s institutional sales, the SEC abandoned the case in its entirety on Thursday and requested a resolution with the company within three weeks.
Cryptocurrency supporters who believed the SEC had overstepped its bounds in going after Ripple and XRP applauded the decision to reverse course. The announcement caused a 15% increase in the price of XRP.
Bitwise’s chief investment officer, Matt Hougan, called this a “paradigm shift” for the cryptocurrency sector. “The SEC is now approaching these issues in a more sophisticated way.”
The SEC is increasing its cryptocurrency regulation efforts, with litigation against large businesses like Coinbase and Binance, and now the Ripple case. This year, the value of cryptocurrencies has been dragged down by the possibility of stricter regulations.
Media reports last Friday suggested the SEC might not appeal a previous court decision concerning a bitcoin ETF, and the Ripple ruling contributed to the confidence that resulted from those reports.
The SEC’s rejection of a spot bitcoin ETF was challenged in court in July, and the court sided with asset manager Grayscale, stating the SEC had overstepped its bounds. Those like Grayscale Investments that want to develop bitcoin ETFs will have a better shot if the verdict is allowed to remain.
The lack of an appeal was interpreted by securities attorneys as an admission of error on the part of the SEC in its previous rejections of bitcoin ETFs. More traditional investors may potentially enter the cryptocurrency industry if a spot bitcoin ETF were available.
On Monday, prices briefly hit $30,000 on speculation that the SEC had given BlackRock permission to launch a spot bitcoin exchange-traded fund. BlackRock rejected the rumors, but the response showed there was interest in a cryptocurrency ETF.
Currently, “the time is right for a spot bitcoin ETF,” as Bitwise’s CIO Hougan put it. “The bitcoin market is much more established now than it was a few years ago, when applications were rejected by the SEC.”
Although the SEC has yet to approve a bitcoin exchange-traded fund (ETF), it must decide by January 10 whether or not to approve additional cryptocurrency funds presented by Grayscale and Bitwise.
After a harsh summer sell-off, bitcoin and other cryptocurrencies saw some renewed risk appetite thanks to favorable news this week. Despite being well off their all-time highs from last year, investors are confident that recent events indicate a turning point.