Bitcoin continued to climb Tuesday as investors show renewed enthusiasm for cryptocurrencies.
Bitcoin was up slightly to $47,730 at last check, according to CoinGecko, while ethereum jumped 2.3% to $3,442 and avalanche was up 2.6% to $94.28. Dogecoin, meanwhile, was down nearly 3% to $0.1461367.
Some crypto analysts see bitcoin reclaiming yearly highs of $47,800, while others note the rise of increased government regulation.
Changpeng Zhao, CEO of crypto exchange Binance, marked the price surge by posting a tweet that played off the Will Smith-Chris Rock slapping incident at the Academy Awards.
In the video clip, captioned "If you sold BTC under $50,000", Smith's face is replaced by the bitcoin symbol as he slaps Rock, now labeled the Bear Market.
A Lot of Money Is Flowing Into Crypto ... Again
Edward Moya, senior market analyst for the Americas with Oanda, said "it is looking like bitcoin bulls can’t and won’t be stopped."
"It looks like the commodity trade has hit a key peak and a lot of money is flowing into crypto," he said. "A couple weeks ago, bitcoin was looking vulnerable after a lot of money moved to the exchanges."
Moya noted that normally, long-term holders that move money to exchanges occur before a big selloff, but that did not happen
"Crypto traders have seen this movie before and a major bitcoin breakout could be here if prices hold the $47,000 level," he said. "Once bitcoin crosses the $50,000 level, that should trigger further retail and institutional interest."
"Bitcoin price has undoubtedly enjoyed a considerable boost this week thanks to Terra protocol’s ongoing reserve fund acquisition," said James Hendy, cryptocurrency and fintech specialist at Finder. "Several purchases of 1000+ BTC have occurred consecutively over the last 7 days, which is significantly reducing supply."
Do Know, co-founder and CEO of the Terra blockchain, said it had purchased more than $1 billion in bitcoin since the end of January.
Hendy said that it "appears that this was the bullish momentum required to flip the key level of resistance at $45,000, which has held bitcoin price advances since the start of the year."
"Now, I see no reason why prices could not continue to march higher and reclaim yearly highs of $47,800" he said.
Prices Continue to March Higher
Tammy Da Costa, an analyst at DailyFX, said that over the past two weeks, bitcoin prices have continued to rise from the March 7 low as risk-on sentiment returned to the markets.
"As the ongoing conflict between Ukraine and Russia enters the second month, sanctions against Russia and the increased probability of more aggressive monetary tightening have done little to deter investors from riskier assets such as equities and cryptocurrency," she said.
Given that inflation remains a key concern for both consumers and policymakers, Da Costa said low-interest rates have supported stocks and bitcoin despite rising geopolitical risks.
She added said that bitcoin was seen as a potential hedge against inflation throughout last year, a characteristic akin to gold.
"However, this narrative has shifted in the first quarter of the year as the direct correlation between crypto and tech stocks becomes more apparent," she said.
Although Bitcoin remains the largest cryptocurrency in terms of market capitalization, Da Costa said ethereum has recently outperformed the "father" of digital assets as central banks demonstrate a greater interest in exploring digital currency.
Ethereum blockchain is more environmentally friendly and the unlimited supply of coins makes it a more feasible option for governments who are embracing the concept of digital assets as a potential medium of exchange, provided that there is regulatory oversight, she said.
"While this can support the crypto sphere, it is possible that the creation of digital currency could hinder progressive growth for bitcoin and ether in the future," Da Costa. "However, for now, as prices remain above the $40,000 handle, the uptrend pertaining to bitcoin may continue to hold, at least for now."
However, bitcoin and other cryptocurrencies have been known for their volatility and can be affected by the prospect of increased regulation.
Winston Ma, managing partner of CloudTree Ventures, Author of "The Digital War – How China’s Tech Power Shapes the Future of AI, Blockchain and Cyberspace," said President Biden's recent executive order calling for a crypto regulatory framework, will accelerate the US government rule making.
Impact of Crypto Technology
"But the trillion dollar question is, which US agency will be the leading crypto regulator?" he said. "A key takeaway from the order is that the Administration is not handing over responsibility for national crypto policy to the banking, securities and other financial services regulators".
Ma said the order gives a seat at the table to agencies such as the State Department, the Domestic Policy Council, the Council of Economic Advisers, the Office of Science and Technology Policy, the Office of Information and Regulatory Affairs and the National Science Foundation.
The order, he said, signals a point of view that "the potential impact of crypto technology on the U.S. economy, national security and global leadership indicates that legacy regulatory structures need to be revisited within a broader frame of reference.
"Indeed, the Assistant to the President for National Security Affairs and the Assistant to the President for Economic Policy are responsible for coordinating the work for the executive agencies required by the order," he said.
David Lesperance, managing partner of immigration and tax adviser at Lesperance & Associates, said that the recent US push on crypto-regulation has now expanded globally.
"Crypto exchanges will have to share details about the identity and transactions of their users with foreign tax authorities under proposals by the Organization for Economic Cooperation and Development (OECD)," he said.
These proposals say crypto providers would have to share their users' names, addresses, Social Security numbers and details of transactions both between crypto and fiat and between different kinds of digital assets, he added.
Exchanges would also have to check the tax residences of new users and would be given 12 months to figure that out for existing clients.
"At this point, it is at the proposal stage, but these obligations will almost certainly become law across at least the G-20 nations as soon as October," he said. "That leaves those with undisclosed crypto assets about 6 months to clean up their affairs.”
