As tensions rose around Binance’s legal battle with the Commodity Futures Trading Commission (CFTC), investors managed to shrug off the concerns and send the biggest cryptocurrency by market capitalization, Bitcoin (BTC), back over $28K. Ethereum (ETH) and other altcoins also reported modest gains, whereas equity markets as a whole closed significantly up.
Despite Binance’s legal troubles, and the CFTC calling several cryptos commodities in the U.S. District Court in Illinois, the markets seemed unaffected by the news; though, the CFTC’s announcement that proof-of-stake tokens such as ETH were securities likely had investors feeling a little bit relieved.
Joe DiPasquale, CEO of crypto asset manager BitBull Capital, believes the markets responded positively “mostly because the broader narrative of a return to quantitative tightening (QE) and fiat printing remains dominant.”
Meanwhile, traders’ anticipation of this week’s US economic data releases, such as the U.S. final fourth-quarter GDP figure and Friday’s PCE inflation data, have been driving the “risk-on” move in the markets.
James Lavish, managing partner at the Bitcoin Opportunity Fund, also credits the continued rise in Bitcoin to China’s recent yuan-settled liquefied natural gas (LNG) trade with the United Arab Emirates, suggesting that BTC may play a role in large-scale cross-border energy trades in the near future.
However, amidst the markets’ bullish sentiment—noted by the 2-year Treasury rate posting higher than the 10-year’s since July 2022—markets analyst Nicholas Colas is more bearish, warning investors that U.S. monetary policy is effectively “pushing the brakes on the US economy” and setting the stage for a potential recession.
Back in crypto, a small Ethereum community is rallying in a bid to keep the Goerli test network alive. Goerli, an Ethereum canary network closely resembling the main network, is used to test the major upgrades of Ethereum, like the upcoming Merge. “An incentivized canary network like Goerli offers unique advantages to builders and users alike” The MakerDAO-backed GoerliDAO is seeking to incentivize activity on the network using Goerli Ether (gETH).
Overall, it looks like investors are still willing to power through the recent crypto woes. Despite a few warnings, the markets are mostly bullish, partly driven by U.S. economic stimulus and improved global outlooks. Despite legal concerns, Binance’s increasing scrutiny has not appeared to dampen the enthusiasm of the crypto markets yet.
Add to that the potential of Ethereum’s Merge and the canary test network Goerli, and it remains to be seen what other resistance investors will face in the coming months.
