The peculiar nature of digital currency was a major draw for most of its existence. Since its launch in 2008, bitcoin has been a novel form of money defying the government. It is ideal for anonymous online drug purchases, but it is also prone to misplacing or being thrown out on garbage day. In addition to the truly bizarre and stupid things, like the NFTs of monkeys that were briefly used as cannon fodder for the art world, there were the copycat fads, such as the 2017 “initial coin offering” bubble and the 2021 shitcoin mania. Whatever your thoughts about all of these things, on paper, they made a lot of people extremely wealthy — at least temporarily.
But things haven’t been the same this year. It’s not a new trend or a tasteful offence that’s strange about everything that happened after the market crash of last year and the conviction of cryptocurrency fraud mastermind Sam Bankman-Fried last week. Crypto had one of its best days in eighteen months on Thursday, and it was all due to putting aside its rebellious beginnings and winning over Wall Street titans and government regulators.
With the vaporization of two of the biggest cryptocurrencies in the world, terraUSD and luna, in early 2022, a single bitcoin spiked momentarily to almost $38,000 on Thursday, the highest level since then. Is there a reason behind its sudden resurrection? The compelling narrative surrounding bitcoin is what drives its value on a daily basis, as it is not dependent on the value of physical assets like oil or national currencies like the US dollar. Crypto investors have a significant new narrative to share. This time, the story appears to be about a young person involved in cryptocurrency growing up and landing a real job on Wall Street, complete with a suit and haircut.
In particular, it seemed that the Securities and Exchange Commission was getting closer to approving an exchange-traded fund (ETF) from massive investment firm BlackRock, which would make it possible for investors to purchase bitcoin with the same ease as they can purchase the S&P 500 securities. (While an exchange-traded fund (ETF) trades similarly to a stock, it can also represent an index, a commodity, or a virtually infinite range of other financial wagers.) Not only bitcoin, either. Following BlackRock’s registration of a corporate entity in Delaware for an Ethereum ETF, Ethereum, the second most popular cryptocurrency globally, was also hitting levels not seen since April, surpassing $2,000 per token.
A new chapter in the history of cryptocurrencies would be marked if Wall Street were to eventually begin trading ETFs for bitcoin or ethereum. ETFs are essential to the finance sector, which is a $6.5 trillion industry in itself. As of last year. Fundamentally speaking, a crypto ETF would make it simpler for financial institutions—such as mutual funds, hedge funds, and pensions—as well as the typical 401(k) holder to trade and profit from digital currencies without having to worry about encryption keys, hacking, or other similar issues.
However, it would be disastrous if BlackRock’s bitcoin was compromised. For the past ten years, since the Winklevoss twins attempted to obtain government approval for one, Bitcoin ETFs have mainly remained a dream. (4 Years later, the SEC rejected it.) A lawsuit from Grayscale, a business owned by Barry Silbert’s Digital Currency Group, a significant—if troubled—player in the cryptocurrency space, is what recently caused things to change. Grayscale’s application for its own ETF, which would have made use of many of the same market-surveillance and safety protocols that other funds used, was arbitrarily denied by the SEC, according to an August ruling by an appeals court.
The appearance of an ETF was all but guaranteed when the SEC announced last month that it would not appeal the ruling. Analyst James Seyffart of Bloomberg Intelligence stated, This was fully expected in his opinion and was just a matter of when, not if. But it’s no secret that BlackRock is well-known, and the mere sight of this Delaware registration caused ether prices to soar.
The whole thing seems to go against what made cryptocurrency so… crypto-y. This was the money Jamie Dimon had referred to as a “fraud” and was, after all, most closely linked to Occupy Wall Street. This type of price spike is usually the result of anonymous, covert Telegram “pump” groups that vanish as soon as they start turning a profit. The fact that its value is increasing due to regulators’ approval and the involvement of companies like BlackRock, which oversees over $10 trillion in assets, is extremely strange and amusing. It’s not just that this is the complete opposite of what it has long stood for, but also, what’s the difference?
The majority of bitcoin owners are more concerned with the currency’s expected increase in value (also known as the “number go up”) than they are with the hyperbolic claims that each bitcoin holder will become their own sovereign wealth fund. Perhaps for this reason, now that Bankman-Fried is no longer a threat, Gary Gensler, the chair of the SEC and leading critic of the cryptocurrency markets, recently stated that FTX might soon be reopened as a cryptocurrency exchange. Following his statements, the price of FTX’s digital currency, which most investors had long since written off, rose by 90%, making it one of its best days ever.
