Cryptocurrencies are rallying again, but concerns remain

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When cryptocurrency exchange FTX imploded in 2022, many saw it as a sign of the crypto industry's end. “Prices have crashed, investors are walking away, and Sam Bankman-Fried (FTX founder) is in jail. It’s not clear if the industry can recover," the Washington Post wrote that December. “The collapse of FTX has dealt a catastrophic blow to crypto’s reputation and aspirations," The Economist noted. This March, an American court sentenced Bankman-Fried to 25 years in prison. However, the industry seems to have recovered and is on another run.

The price of bitcoin, the pioneer cryptocurrency and the biggest by market cap ($1.3 trillion), has increased by 140% in the past year. Other large cryptocurrencies have also appreciated in excess of 75% during the same period, including ethereum (market cap of $398 billion) and Binance coin ($87.3 billion). Spot trading volumes of cryptocurrencies on centralised exchanges more than doubled month-on-month in March to $2.94 trillion, the highest since May 2021. Derivatives trading volumes for the same month jumped 86.5% to $6.18 trillion, the highest ever, according to CDC's latest report on cryptocurrency exchanges.

Investor interest in crypto companies has also picked up since the last quarter of 2023. It had started to wane in 2022, initially due to rising interest rates and then the collapse of companies such as FTX and Terra. In each of the past two quarters, crypto companies have attracted over $2.6 billion in venture capital funding. In March alone, they attracted $1.16 billion, the highest since April 2022, according to Rootdata.

This January, the US Securities and Exchange Commission approved nearly a dozen spot bitcoin ETFs (exchange-traded funds), after years of resisting