Bitcoin jumps above $18,000 to highest level in a month, as FTX lawyers recover $5 billion
Cemile Bingol | Digitalvision Vectors | Getty Images
Bitcoin on Thursday surged to its highest price in nearly a month, as traders bet on a U.S. inflation cooldown and digested news that lawyers for defunct crypto exchange FTX found billions of dollars’ worth of assets.
The world’s largest digital currency climbed above $18,000 for the first time since Dec. 14 late Wednesday, increasing in value by about 5% in the last 24 hours. Bitcoin was trading at $18,154.35 as of 5 a.m. ET Thursday morning, according to CoinMetrics data.
On Wednesday, attorneys for collapsed crypto exchange FTX said they had found around $5 billion in “liquid” assets, including cash and digital assets. The recovery will be a welcome boon to FTX customers after the crypto exchange imploded in November.
FTX lawyers nevertheless warned the $5 billion cache was so high that selling the assets could lead to significant downside pressure on the market, driving down their value.
“Bitcoin has been in a downtrend for over a year now, which is a standard period of a bear market in crypto,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC in emailed comments Thursday morning.
“We’ve had many negative events transpire over the past year, and if one looks at the price reaction to those events, in general it’s been declining less and less — an indication that the market is accepting the news quite well, sell pressure is being absorbed, and hence we’re moving to an accumulation stage,” he added. “This could also mean that the market thinks the worst is over for crypto and that most negative news in now priced in.”
U.S. inflation data due out Thursday is forecast to show a softening of inflation. Economists polled by Dow Jones anticipate that the consumer price index declined 0.1% month-on-month in December.
Inflation is still expected to rise 6.5% year-over-year, though this would be down from a 7.1% jump in November and well off a 9.1% peak rate in June. Investors hope the decline may put pressure on the U.S. Federal Reserve to reverse interest rate increases.
The Fed and other central banks have been raising interest rates over the past year or so in an effort to tame soaring inflation — in moves that forced stocks and cryptocurrencies sharply lower in 2022.
The hope now is that the central bank will cut rates, taking some pressure off risk assets.
“Today’s CPI numbers could be quite telling, and a hot CPI print could definitely throw a spanner in the works for risk-on assets such as crypto,” Ayyar said.
That or further negative news in crypto may cause the price of bitcoin to slip below $17,000, Ayyar warned, setting the stage for additional declines and a potential fall of the digital asset within a $12,000 to $14,000 range.
Bitcoin is down about 74% from its November 2021 all-time high of $68,990. Last year, nearly $1.4 trillion of value was wiped off the cryptocurrency market, as traders dumped risky assets like technology and growth stocks.
Bitcoin and the broader digital currency market also slumped, suggesting increasing correlation with major stock benchmarks like the Nasdaq Composite.
The plunge was also caused by crypto-specific issues, including the collapses of projects and companies like FTX and Terra.
Bitcoin has however started 2023 on positive footing, with its price rising steadily over the last 12 days.
Other digital currencies were buoyed by the jump in bitcoin prices Thursday. Ether, the second-largest coin, rose almost 5% to $1,397.78 while Binance’s BNB token rose 3% to $283.
Changpeng Zhao, the CEO of Binance, told CNBC Wednesday that the exchange plans to increase hiring by 15% to 30% in 2023, in stark contrast with other exchanges that have cut jobs.
Binance, which earlier earmarked $1 billion for a fund aimed at propping up the industry after the collapse of FTX, has itself been beset by fears over the soundness of its reserves. The auditor working on the company’s so-called proof of reserves, Mazars, paused all work with crypto companies in December.
Binance says it has more than enough assets to cover liabilities.
Tik Tok creators gather before a press conference to voice their opposition to the “Protecting Americans from Foreign Adversary Controlled Applications Act,” pending crackdown legislation on TikTok in the House of Representatives, on Capitol Hill in Washington, U.S., March 12, 2024.
Craig Hudson | Reuters
The Supreme Court on Friday will hear oral arguments in the case involving the future of TikTok in the U.S., which could ban the popular app as soon as next week.
The justices will consider whether the Protecting Americans from Foreign Adversary Controlled Applications Act, the law that targets TikTok’s ban and imposes harsh civil penalties for app “entities” that continue to carry the service after Jan.19, violates the U.S. Constitution’s free speech protections.
It’s unclear when the court will hand down a decision, and if China’s ByteDance continues to refuse to divest TikTok to an American company, it faces a complete ban nationwide.
What will change about the user experience?
The roughly 115 million U.S. TikTok monthly active users could face a range of scenarios depending on when the Supreme Court hands down a decision.
If no word comes before the law takes effect on Jan. 19 and the ban goes through, it’s possible that users would still be able to post or engage with the app if they already have it downloaded. However, those users would likely be unable to update or redownload the app after that date, multiple legal experts said.
Thousands of short-form video creators who generate income from TikTok through ad revenue, paid partnerships, merchandise and more will likely need to transition their businesses to other platforms, like YouTube or Instagram.
“Shutting down TikTok, even for a single day, would be a big deal, not just for people who create content on TikTok, but everyone who shares or views content,” said George Wang, a staff attorney at the Knight First Amendment Institute who helped write the institute’s amicus briefs on the case.
“It sets a really dangerous precedent for how we regulate speech online,” Wang said.
Who supports and opposes the ban?
Dozens of high-profile amicus briefs from organizations, members of Congress and President-elect Donald Trump were filed supporting both the government and ByteDance.
The government, led by Attorney General Merrick Garland, alleges that until ByteDance divests TikTok, the app remains a “powerful tool for espionage” and a “potent weapon for covert influence operations.”
Trump’s brief did not voice support for either side, but it did ask the court to oppose banning the platform and allow him to find a political resolution that allows the service to continue while addressing national security concerns.
The short-form video app played a notable role in both Trump and Democratic nominee Kamala Harris’ presidential campaigns in 2024, and it’s one of the most common news sources for younger voters.
In a September Truth Social post, Trump wrote in all caps Americans who want to save TikTok should vote for him. The post was quoted in his amicus brief.
What comes next?
It’s unclear when the Supreme Court will issue its ruling, but the case’s expedited hearing has some predicting that the court could issue a quick ruling.
The case will have “enormous implications” since TikTok’s user base in the U.S. is so large, said Erwin Chemerinsky, dean of Berkeley Law.
“It’s unprecedented for the government to prohibit platforms for speech, especially one so many people use,” Chemerinsky said. “Ultimately, this is a tension between free speech issues on the one hand and claims of national security on the other.”
WATCH: It appears TikTok could really get shut down, says Jim Cramer
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