Cryptocurrency prices have been steadily rising after a period of decline known as the “crypto winter” was deepened by the collapse of the FTX exchange in 2021.
Bitcoin is currently trading at around $42,400, up from around $16,500 at the same time last year, according to CoinDesk. Ethereum has also seen an 85% increase from the same period in 2022.
The reversal in fortunes follows the conviction of former FTX CEO Sam Bankman-Fried on charges of fraud and money laundering.
Investors are keeping a close eye on the U.S. Securities and Exchange Commission as it could approve a Bitcoin spot ETF in January. This would be a pooled investment security that can be bought and sold like stocks.
Industry advocates say this new way of investing in Bitcoin at spot prices could make it easier for anyone to enter the cryptoverse while lowering some of the risks associated with investing in cryptocurrencies.
However, experts still maintain that crypto is a risky bet with wildly unpredictable fluctuations in value. The SEC has filed lawsuits against exchanges Coinbase and Kraken, and the regulator was not part of a settlement with Binance, whom the SEC alleges misled investors.
Kevin Werbach, a professor at Wharton, expects to see more enforcement actions in 2023. He noted that it takes time to build these cases, especially against big players who are not based in the United States.
While a crypto comeback may be on the horizon, experts advise investors to proceed with caution. Lower liquidity can exacerbate price fluctuations and liquidity in crypto markets has yet to return to pre-FTX levels.
The Associated Press contributed to this report.