Why bitcoin may stay at elevated levels: Economist

After a sudden weekend surge, bitcoin (BTC-USD) has reached a new all-time high of $72,000. Since the Securities and Exchange Commission's approval of a spot bitcoin ETF, the cryptocurrency has been on a tear. Some crypto investors are hesitant, however, noting the digital asset's history of extreme volatility.

Deutsche Bank Senior Economist Marion Laboure joins Yahoo Finance to share her projections for future bitcoin gains and the impact of regulations on the crypto space.

Laboure explains why bitcoin is likely to remain at elevated levels: "I think there are good reasons why it's at this elevated level and it's probably going to stay just as high. If I look at the future, you just mentioned ETF, the spot bitcoin ETF...we have also more ETF which are likely coming. The SEC decision on the spot ETF application is expected mid-May and overall this evolving ETF landscape and participation of institutional players are helping crypto mature into a more established asset class. "

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video transcript

[AUDIO LOGO]

SEANA SMITH: Bitcoin surging to another record briefly crossing above $72,000. You can see it just around $71,800 right now. Other crypto related stocks are also seeing a boost from the recent rally in Bitcoin, driven by optimism from the SEC's approval of the spot Bitcoin ETFs. SEC chairman Gary Gensler spoke with Yahoo Finance last week about that decision. Let's take a listen.

[VIDEO PLAYBACK]

GARY GENSLER: I thought that it was the most sustainable path forward along with the commission to approve those. And investors got additional disclosures based upon those exchange-traded products. They get certain protections on the stock exchanges, but they should also, I would say, be aware it's a highly speculative, volatile underlying asset, Bitcoin.

[END PLAYBACK]

SEANA SMITH: All right, we want to bring in Marion Laboure, Deutsche Bank's senior economist. Marion, it's great to have you here. So talk to us just about the recent run up that we've seen in the price of Bitcoin. You've outlined a number of factors driving it. What are the biggest catalysts?

MARION LABOURE: Yeah, hi. Many thanks for having me today. So yes, indeed, there are few reasons why Bitcoin reached a record high.

First, the ETF has just been approved last January and we have more ETF coming as well. We are also going probably to have like a few central banks interest rate cuts, which are all approaching the Bitcoin halving is becoming very near now. And regulation is also coming this year.

BRAD SMITH: And one of the areas where we're seeing even more, kind of, coziness for it is the UK. And so where more globally are we going to expect some of the allowance for ETPs, or Exchange Traded Products for cryptocurrency, and specifically Bitcoin and Ethereum perhaps, to really continue to fuel this rally?

MARION LABOURE: Yeah, absolutely. I mean today in the UK, the FCA has just softened stance on the sector by permitting Bitcoin and Ethereum-backed exchange traded notes. But we are also seeing this year more and more regulation worldwide, for example, in the EU. MiCA regulation will take effect in stages as well. Rules governing stablecoins will become enforceable starting next quarter.

In the US as well, we have regulatory action which have accelerated despite the lack of overarching rules. We have around like half of the CFTC enforcement actions in the last fiscal years, which involved digital assets. Last year the SEC sued Binance and Coinbase as well. And we also had the highest civil monetary penalty ordered in any CFTC, which was made against a fraudulent scheme involving Bitcoin and it was equal to $1.7 billion.

And if I look at regulation as a whole, I really see it as a net positive development for the industry. If we have a clearer regulatory framework which might have increased corporate adoption and higher liquidity, which is probably going to result in less concentration. And ultimately, it's going to help address volatility in the crypto asset space.

SEANA SMITH: So Marion, do you think it's likely then that we're going to stay at these elevated levels?

MARION LABOURE: So I think there are good reasons why it's at this elevated level and it's probably going to stay high. I mean if I look at the future, we just mentioned ETF, the spot Bitcoin ETF, which was helpful. But we have also more ETF, which are likely coming. The SEC first decision on the spot Ethereum ETF application is expected mid May. And overall, this evolving ETF landscape and participation of institutional players are helping crypto mature into a more established asset class.