Bitcoin’s 2023 rally gathers steam as cryptocurrency briefly tops $24,000

Bitcoin rose to the highest level since August on Wednesday, gaining for a second day as a decrease in risk aversion helps to temper concerns about a widening crackdown by US regulators.

The largest cryptocurrency by market value jumped by 8.2% to $24,083 as of 4:19 p.m. in New York. The increase is the biggest one-day gain in about a month. Smaller digital tokens such as Ether, Cardano and Polkadot also rallied. 

Crypto prices have been buffeted in recent weeks by a combination of US Securities and Exchange Commission enforcement actions, warnings and speculation of additional regulatory measures. Kraken reached a settlement last week to end its staking product, while Paxos halted issuance of its Binance-branded BUSD token, raising concern that other stablecoins such as Circle’s USBCtoken were facing regulatory action. 

“I think that today’s pump is basically people realizing that the SEC is probably not going to kill Circle,” said Henry Elder, head of decentralized finance at Wave Financial. 

The SEC also notified Paxos Trust Co. that it may sue over the BUSD stablecoin. Finally on Wednesday, the SEC floated a proposal for rules that would tighten regulation around crypto custodians.

The circulation of BUSD, the third-largest stablecoin, was $14.6 billion as of Wednesday morning in New York, Paxos said. It had been about $16.1 billion as of Monday, according to CoinGecko data. Many investors are opting for No. 1-ranked Tether, known as USDT, which now accounts for just over half of the $138 billion stablecoin market.

“It seems some of this is because BUSD, the Binance stablecoin that the SEC has issued an order against, has not appeared to have issues with redemptions, quelling potential fears,” said Katie Talati, director of research at Arca. 

Talati also noted that Ether benefitted for a separate reason.