What happened
Most cryptocurrencies rose this week as investors cheered more interest and participation in the sector from large mainstream financial institutions.
The price of the world's largest cryptocurrency, Bitcoin (CRYPTO:BTC), traded more than 13% higher on the week as of 12:25 p.m. ET Thursday, according to data from S&P Global Market Intelligence. Meanwhile, the price of the world's second-largest cryptocurrency, Ethereum (CRYPTO:ETH), traded more than 9% higher, while the price of the meme token Shiba Inu (CRYPTO:SHIB) was up 14.5%.
Image source: Getty Images.
So what
Heading into the week, cryptocurrencies seemed to be heading south. The Securities and Exchange Commission (SEC) had just sued two of the largest crypto exchanges, Binance and Coinbase Global, and the Federal Reserve indicated that it expects to have to raise interest rates two more times this year, not that the market is entirely buying it.
But things quickly reversed course when BlackRock, the world's largest asset manager, filed with the SEC to launch what would be the first spot Bitcoin exchange-traded fund (ETF) in the U.S. Unlike past attempts, investors seem more optimistic about BlackRock's chances for approval because BlackRock's application has offered to enter into a surveillance-sharing agreement with the Nasdaq, the exchange where the ETF would be listed. This agreement would share trading data that regulators believe is critical to preventing market manipulation.
After BlackRock submitted an application, other companies followed suit. Also this week, the public learned that a new crypto exchange called EDX Markets, which is backed by Fidelity, Charles Schwab, and Citadel Securities, went live and began providing access for customers to trade several crypto tokens including Bitcoin and Ethereum.
Caitlin Long, the CEO of the crypto bank Custodia Bank, which has not been able to gain access to a Federal Reserve master account, said she thinks the timing of all of these moves by big Wall Street players is no accident.
"All of a sudden we've got these big Wall Street firms that are coming into crypto right after the runway's been cleared," Long told The Defiant this week.
In other more specific news, Shiba Inu seemed to be benefiting from an update on Shibarium, its Layer 2 protocol that will give Shiba Inu more of its own blockchain network. Shiba Inu is an ERC-20 token, meaning it operates on Ethereum's blockchain.
Today, Shibarium's lead developer, Shytoshi Kusama, said that Shibarium will feature what he is calling Shibacals, which will use near-field communication chips to authenticate tangible real-world items digitally with tools like non-fungible tokens.
Now what
Crypto is definitely benefiting from mainstream Wall Street giants wading deeper into the sector. Not only does this help legitimize the industry, but it also creates a path to further integrate cryptocurrencies into the traditional financial system, which could increase broader adoption.
Obviously, these ETFs still need to get approval, but they do seem to have a much better chance than prior attempts.
Ultimately, I continue to view Bitcoin and Ethereum as good long-term investments worth having exposure to. Bitcoin continues to become more universally accepted and has been more resilient during crypto sell-offs. Ethereum's recent upgrade and overall technology have the potential to be used in many different capacities. While I am somewhat intrigued by Shibarium and its technical capabilities, I need to see it in action before considering investing in the meme token.
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Charles Schwab is an advertising partner of The Ascent, a Motley Fool company. Bram Berkowitz has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, and Ethereum. The Motley Fool recommends Charles Schwab. The Motley Fool has a disclosure policy.
