Bitcoin prices hit their highest rates in the last five months Wednesday as they went beyond $55,000. During yesterday’s session, it hit an intraday high of $55,499 before dropping and closing to $54,873.02.
This represented a 7.6% increase from Tuesday’s closing price. Popular Bitcoin alternative Ether also rose 2.8% yesterday. It’s now priced at $3,575.73.
Regulatory Uncertainty Keeps Bitcoin Prices Down
The Bitcoin rally yesterday happened as the United States announced it has no plans to ban cryptocurrency. According to Matt Hougan, Chief Investment Officer of Bitwise Asset Management, a little hint of policy clarity is driving prices up.
“Regulatory uncertainty is what’s still keeping investors out of the market and every time we get a step closer to regulatory clarity, you see this kind of reaction. It’s the primary driver of the next great bull market in crypto,” he said.
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Bitwise shared that a majority of financial advisors surveyed by Bitwise said that regulatory uncertainty is holding them back from making crypto allocations. This is the number one answer in their survey for the past three years.
US Has No Plans To Ban Cryptocurrency
Last Tuesday, Securities and Exchange Commission Chairman Gary Gensler appeared in a House Financial Services Committee meeting. He said that the SEC has no plans to ban cryptocurrency.
He added that if a ban would come up, that would be up to Congress. Gensler’s comments echoed an earlier remark by Federal Reserve Chairman Jerome Powell. He said last Friday that he also has no plans to ban cryptocurrencies.
“You had every major regulatory agency in the U.S. this summer declaring that they needed to create a new regulatory regime around crypto.
That created a great deal of uncertainty in investors’ minds, they were hesitant to allocate not knowing what the range of possibilities would be.
The reason we’re rallying this week is that the most extreme left tail of following the path of China was wiped from the market by both Jerome Powell and Gary Gensler,” Hougan added.
Herd Movement By Institutional Investors
Meanwhile, Noelle Acheson, head of market insights at Genesis, said the recent increase in Bitcoin prices is different. All signs point to an institutionally driven movement.
“Institutional investors move as a herd, they are momentum chasers. When they see this kind of momentum, they start to think, what am I going to miss? Is my performance going to be weaker than those of my competitors? Maybe I should pile into that,” she said.
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Over the past 24 hours, Acheson noted that Bitcoin maintained its top-five position among performing digital assets. She said she had never seen something like that before.
Usually, smaller altcoins or assets are the ones that keep jumping up over a day. As Bitcoin is an institutional entry point for crypto, the rise in Bitcoin prices is a sign. Institutional investors are coming.
In addition, she saw little liquidation activity. Which is unusual for crypto that just jumped in price. “At one stage that price jumped 3.5% in a five-minute window, and without the liquidations, that says that that is big spot buying,” she observed.
Yellen Gave a Major Reason to Buy Bitcoin
According to CNBC’s Jim Cramer, Yellen also gave investors the push to get Bitcoin. “The Janet Yellen discussion yesterday was a major reason to buy bitcoin,” Cramer said Wednesday.
“If you parse what she’s saying and it becomes true, the dollar doesn’t seem to be as valuable as crypto,” he added. Last Tuesday, Yellen warned that inflationary pressures hitting the US economy could last several months.
Unless the US lifts the debt limit in two weeks, everybody should expect a recession.
Watch Bloomberg Technology’s video reporting that SEC Chairman Gary Gensler Signals No Interest in Crypto Ban:
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