Bitcoin and Ethereum Break Records in December 2023 – What’s Behind the Crypto Boom and What’s Next?
Crypto News Roundup: December 2023
The crypto market has been on a roller coaster ride in the last month, with Bitcoin and Ethereum reaching new highs, regulators cracking down on crypto exchanges and mixers, and hackers stealing billions from North Korea. Here are some of the highlights of the crypto news in December 2023.
Bitcoin and Ethereum Prices Soar, Spurring Crypto Fund Inflows
Bitcoin and Ethereum, the two largest cryptocurrencies by market capitalization, have both hit 18-month price highs in December, as the crypto market prepares for an institutional bull run. Bitcoin has surged 150% this year to top $40,000, while Ethereum has gained 250% to reach $4,000. The rally has been driven by several factors, including the anticipation of spot Bitcoin ETFs in the US, the adoption of crypto by mainstream companies and celebrities, and the growing demand for decentralized applications and NFTs on the Ethereum network.
The rising prices have also attracted more investors to the crypto space, as evidenced by the record inflows to crypto funds. According to a report by CoinShares, crypto fund inflows jumped to $1.76 billion in the week ending Dec. 1, the highest level since May 2021. The majority of the inflows went to Bitcoin and Ethereum funds, which accounted for $1.2 billion and $400 million, respectively. The report also noted that the total assets under management of crypto funds reached $66 billion, a new all-time high.
SEC’s 「Crypto Mom」 Doesn’t Offer Unconditional Love
Hester Peirce, one of the five commissioners of the US Securities and Exchange Commission (SEC), is often dubbed as 「Crypto Mom」 by the crypto community for her supportive stance on crypto regulation. However, in a recent interview with CoinDesk, Peirce clarified that she doesn’t view herself as pro-crypto, per se. Rather, her views have been driven by her core philosophy of how government should work.
「I’m not pro-crypto, I’m pro-innovation,」 Peirce said. 「I think that the government should be very careful about stepping in and trying to stop innovation or trying to shape innovation in a way that suits the government’s preferences.」
Peirce also expressed her frustration with the SEC’s slow and unclear approach to crypto regulation, especially regarding the approval of spot Bitcoin ETFs, which have been repeatedly delayed or rejected by the agency. She argued that the SEC should apply the same standards to crypto products as it does to other securities, and that investors should be able to access crypto through regulated venues.
「I think that we’ve missed the boat on this one,」 Peirce said. 「I think that we should have approved a spot Bitcoin ETF a long time ago, and I think that would have provided a lot of clarity to the market.」
The Crypto Industry Is in the Dumps. So Why Is Bitcoin Suddenly Flying High?
Despite the woes of some of the leading crypto companies, such as FTX and Binance, which have faced regulatory scrutiny and legal challenges in various jurisdictions, Bitcoin prices have defied the odds and soared to new heights. According to some analysts, this is because Bitcoin is becoming more mature and resilient as an asset class, and is benefiting from the diversification and institutionalization of the crypto market.
One of the factors that has boosted Bitcoin’s appeal is the emergence of Bitcoin futures ETFs in the US, which have attracted over $2 billion in assets since their launch in October. These products have provided a convenient and regulated way for investors to gain exposure to Bitcoin without having to deal with the technical and security issues of holding the underlying asset. Moreover, the futures ETFs have also increased the liquidity and efficiency of the Bitcoin market, reducing the volatility and premium of the futures contracts.
Another factor that has supported Bitcoin’s growth is the increasing adoption of crypto by mainstream companies and celebrities, such as Tesla, Twitter, Facebook, and Cristiano Ronaldo. These entities have either integrated crypto into their platforms, accepted crypto as a form of payment, or endorsed crypto as a viable investment. These moves have increased the awareness and legitimacy of crypto among the general public, and have created a positive feedback loop for the crypto ecosystem.
Finally, Bitcoin has also benefited from the innovation and expansion of the crypto space, especially in the areas of decentralized finance (DeFi) and non-fungible tokens (NFTs). These sectors have leveraged the Ethereum network to create new use cases and value propositions for crypto, such as lending, borrowing, trading, gaming, and art. These applications have attracted more users and capital to the crypto space, and have also increased the demand for Ethereum, which in turn has a positive spillover effect on Bitcoin, as the two assets are highly correlated.
