The crypto sector also saw its largest Bitcoin short squeeze since May amid a new high spurred by traditional interest in cryptocurrencies.
Bitcoin (BTC) has hit a new high of $28,170.18 not seen since May, after climbing more than 5% on Tuesday. The world’s largest cryptocurrency gained more than 9% in the past 7 days, with Ether (ETH) also rising nearly 3% to $1,781.
According to data from CoinGlass, the spike caused liquidations worth $36.6 million in 24 hours for traders with short positions. The short squeeze is also a new record, the largest seen since May 28.
Bitcoin is performing satisfactorily despite the regulatory turmoil recently witnessed by the crypto sector. The coin’s rise comes as several major traditional financial services firms are softening their aversion to crypto and embracing digital assets.
Bitcoin Hit New High Courtesy BlackRock and Others
American investment company and asset management giant BlackRock (NYSE: BLK) applied for a spot Bitcoin exchange-traded fund (ETF) with the US Securities and Exchange Commission (SEC). In a filing with the SEC, BlackRock noted it is interested in providing investors with an alternative method to enjoy Bitcoin exposure without owning the asset. In addition to BlackRock, financial services giant Deutsche Bank revealed it applied for a license to custody digital assets in Germany.
Co-founder and CEO of decentralized finance (DeFi) platform Umee, Brent Xu, believes there is a direct correlation between Bitcoin’s recent climb and the events in the traditional financial sector. According to Xu:
“The Bitcoin rally certainly is correlated with the news of all these larger traditional financial institutions looking to get serious exposure to the digital asset ecosystem. It’s clear that BlackRock, Fidelity, and the others have client bases that want to invest in BTC and other crypto assets by way of ETFs and other more traditional investment vehicles.”
Xu also said the interest in crypto by financial institutions has helped to repair the somewhat negative outlook caused by the recent regulatory problems in the sector. The US SEC has been cracking down on crypto firms and has sued major exchanges Binance and Coinbase.
Regulatory Problems Plaguing BTC and Crypto
Earlier this month, the SEC accused Binance of commingling user funds via a separate entity, and inadequately restricting US customers to Binance US. The SEC said Binance and CEO Changpeng Zhao knew they were violating US laws but continued anyway.
Furthermore, the Commission sued Coinbase for operating as a national securities exchange and broker without registering as required by law. According to the SEC, both exchanges deliberately flouted laws for their own gain and did not provide investors with adequate protection.
Although Coinbase and Binance have refuted the SEC’s accusations, there are ripple effects already. For instance, Binance US suffered a 78% market crash following the SEC’s lawsuit as it tries to regain public trust. The US arm of the world’s largest crypto exchange is also reportedly laying off staff in the compliance, risk, and legal departments. According to a source, Binance US had fired 50 people as of Friday.
In addition, Binance.US has suspended all USD deposits following the lawsuit. While the SEC initially sought to seize all Binance.US assets, both entities later agreed to negotiate a deal that would allow Binance.US operations to continue. Instead of a complete asset freeze, Binance.US will continue its services and pay employees while allowing users to access all their funds.