February 24, 2024
Bitcoin is up – and the enthusiasts are back

That’s the takeaway from today’s Morning Brief, things you can do Sign up To receive in your inbox every morning:

You may have heard – Bitcoin is back. The price of the largest cryptocurrency has soared above $42,000 and is up more than 150% this year.

With the price correction, we have seen the re-emergence of a certain type of financial media character: the crook, the opportunist, the pimp, the pimp.

They were everywhere when Bitcoin was climbing to record highs in 2021. When Americans were receiving government checks, sitting at home, and trying to strike it rich, crypto seemed like a no-brainer, driven in no small part by FOMO — and these hype people. Saying this is the future of finance.

The voices fell silent when the price fell from above $60,000 to below $20,000, although loyalists insisted this was part of Bitcoin’s “normal cycle.” This calm turned to embarrassment for some with the collapse of the Terra stablecoin, the implosion of FTX (with which many had financial ties), and the arrest of Sam Bankman-Fried.

But another characteristic of some people from this group is their lack of shyness. So even as all those events were unfolding, it wasn’t hard to find him on Twitter, increasingly paying attention to his stated belief that Bitcoin is the answer — to getting rich, to finance, whatever.

Will retail investors get caught in FOMO once again? signs point to yes. The first leg of the latest rally seems to be driven by predictions (once again) for institutional investment in crypto, coupled with the anticipation of SEC approval for a spot Bitcoin ETF.

Retail interest is renewed with price action. Robinhood just reported that November crypto trading volume increased by 75% compared to October. Robinhood CEO Vlad Tenev told Yahoo Finance executive editor Brian Sozzi that price appreciation increases media interest and triggers retail investment:

“You are starting to see retail investors waking up to some segments of the rally. We have seen in the past that as the price of Bitcoin reaches all-time highs, media coverage and intensity increases. And I think that plays a role too. If people are hearing more about crypto around them, they’re more interested, and you start to see that reflected in trading activity, at least in the past.

All of this doesn’t mean that Bitcoin won’t go up, or that it actually couldn’t play some role in the future of finance. But I’ve long been skeptical about when betting on an asset starts to feel like a religious belief – especially when the belief is tied to profits, and also depends on you spending the cash.

There are some rational voices in the crypto world who simply don’t believe the stupid theory. One of them is Devin Ryan, who covers the fintech industry for Citizens JMP Securities. He’s looking at the sheer scale of the ETF industry and giant asset managers like BlackRock, who actually make sure to allocate to their Bitcoin ETF if it’s approved.

“People are moving away from ETFs a little bit,” Ryan told Yahoo Finance Live. But a “very small fraction” of the trillions of asset managers will actually be very large. Just think of all the private clients who are allocating a few million here and a few there.

“This could be hundreds of billions of dollars of market cap expansion,” Ryan said.

It may not be the moon, but it’s something.

concise image of morning

concise image of morning

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Source: www.bing.com

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