Bitcoin is trading above $ 50,000 as cryptos gain steam. What is behind the rally.

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Bitcoin tends to fall in September. The time of dreams

The hot cryptocurrency summer shows no signs of cooling.

Bitcoin (BTC) was trading around $ 50,500 on Friday, up 1.7% in 24 hours for a gain of over 30% from last month. Ethereum (ETH) hit record highs with a 5% gain, surpassing $ 4,000 for the first time. Other cryptos are also rallying: Solana (SOL), Litecoin (LTC) and Avalanche (AVAX) have all gained more than 10% in the last 24 hours.

The rally lifts crypto-related stocks even as regulatory pressure increases at state and federal levels. Coinbase Global (ticker; COIN) was up 2% on Friday. The Global X Blockchain ETF (BKCH), a basket of crypto-related companies, was ahead 4.3%.

Bitcoin appears to have broken through technical resistance at $ 50,000. Its next resistance level is $ 58,000, according to Fundstrat Global Advisors.

Some large investors seem to be buying more Bitcoin. Bill Miller, the veteran value fund manager, had amassed 1.5 million shares of Grayscale Bitcoin Trust (GBTC) in his MillerOpportunity Trust (LGOAX) mutual fund, according to securities filings. This equates to around 1,400 underlying Bitcoin tokens, worth around $ 70 million at recent prices. Still, the fund hasn’t performed well this year, gaining 10% and trailing 98% of its peers, according to Morningstar.

Ethereum, meanwhile, is getting a technical upgrade to its underlying network a month ago. According to Fundstrat, more than 180,000 ETH tokens, or roughly $ 720 million at recent market prices, have been burnt or taken out of supply since then, resulting in pressures that could push the price up.

Crypto apostles like Jack Dorsey, CEO of Twitter (TWTR) and Square (SQ), are expanding their investments, with the aim of generating crypto-related income streams. Dorsey said on Twitter last week that Square is building an open-platform decentralized exchange for Bitcoin. The platform, dubbed TBD, will make it easier to fund a non-custodial Bitcoin wallet anywhere in the world, expanding access from current crypto ramps like Squares Cash App or Coinbase, according to a tweet from Mike Brock. , who is leading the project for Carré.

Some small banks are also getting into cyrpto. Oklahoma-based Vast Bank has become the first federally chartered lender, backed by the Federal Deposit Insurance Corp., to offer crypto banking services, according to Vast CEO Brad Scrivner. The bank offers crypto transactions on a mobile app, acts as a custodian, and offers insurance on crypto assets through Coinbase.

However, financial investments are made in a more difficult regulatory context. The leading U.S. securities regulator Gary Gensler, chairman of the Securities and Exchange Commission, warns crypto companies not to launch products or services without first registering with regulators, saying they do not should not ask for forgiveness after launching without doing so.

The SEC has launched an investigation into Uniswap Labs, developer of one of the world’s largest decentralized financial exchanges, or DeFi, according to a Wall Street Journal report. SEC enforcement attorneys are seeking information on how investors use Uniswap and its marketing practices, according to the Journal. Uniswap has stated that it is committed to complying with laws and regulations governing our industry and to providing information to regulators that will assist them in any investigation.

Gensler also appears concerned about DeFidecentralized computer networks that can be used for a variety of financial transactions and transactions, indicating that they could be subject to more regulatory action, according to its recent public comments.

State securities regulators are also circling around, looking for crypto lending platforms like BlockFi, where investors can earn high returns on their digital assets. New Jersey regulators have ordered BlockFi to stop offering new interest-bearing accounts, although the effective date has been postponed to September 30.

BlockFi said in a statement that it believes its accounts are legal and appropriate for participants in the crypto market.

Bitcoin prices may be due for a break. September was the only month with a negative average return since 2011, according to Fundstrat. The crypto fell an average of 7% over the month. Prices have historically rebounded after that, with average gains of 13% in October, 53% in November and 14% in December.

This trend is one of the reasons Fundstrat urges investors to view any downturn as a buying opportunity.

We continue to maintain a bullish stance for the rest of the year, analysts wrote in a note this week. The Fed’s more accommodating stance of late should support abundant liquidity for crypto assets as investors get richer, according to Fundstrat. While data trends can change quickly, we believe the pattern for a prolonged bull run remains intact, he said.

Write to Daren Fonda at [email protected]

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