Year to date Bitcoin is up over 60% and for the first time in it’s existence has proven to be a safe haven, which of course doesn’t mean it will continue to be that.
But why has it performed so well… the SEC has really cracked down on crypto over the last year. Coinbase (a large crypto exchange) received a Wells notice from the SEC, focused on staking and asset listing claiming that some crypto products are actually securities and need to conform to SEC regulations. A Wells notice typically preceded enforcement action.
The FTX failure really opened the eyes of regulators, being it’s their job to protect consumers.
Kraken is freezing incoming and outgoing wires from its crypto exchange.
Gary Gensler, the chairman of the SEC, said that Bitcoin is the only cryptocurrency that he felt comfortable calling a commodity, meaning every other cryptocurrency would be a security (including Ethereum).
Banks here in the US and other developed nations are strong, especially the large ones.
So why would people be buying cryptocurrencies.
Here are my thoughts on why Bitcoin is rallying as hard as it is:
So what happens next.
It is hard to say with certainty what action will be taken against crypto and what effects it will have on the industry, but it looks like things are moving in that direction.
Needless to say, crypto is currently unregulated which gives them freedom to do pretty much whatever they want, giving them massive growth potential and unprecedented access. A reversal in that could seriously damage the outlook.
My crypto exposure is next to nothing, and it will continue to stay that way for the time being.
All I can say it take a lesson from the bank failures and practice proper risk management.