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The value of the global cryptocurrency market has reached $4tn for the first time, as investors anticipate billions of Wall Street dollars flooding into the sector after the passage of landmark US digital asset legislation.
The price of bitcoin hit a record high of more than $123,000 this week, while other tokens such as ether and Solana’s sol have also jumped.
The rally pushed the combined market value of all cryptocurrencies above $4tn on Friday, according to digital assets data provider CoinGecko.
The moves came amid a flurry of US legislation that constituted “one of the most significant moves” towards mainstream adoption of crypto, according to Mark Palmer, an analyst at investment bank The Benchmark Company.
“Institutional funds which have been on the sidelines waiting for exactly this type of clarity will flow into the space,” he said.
On Thursday, Congress passed the so-called Genius Act, which regulates tokens called stablecoins that are pegged to sovereign currencies, typically the US dollar.
Separate rules overseeing digital asset market structure and banning central bank digital currencies were also passed by the House of Representatives, but still need to be voted on by the Senate.
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By reaching the $4tn mark, the industry has achieved a huge turnaround since 2022, when its value fell to about $800bn following the failure of crypto exchange FTX in late 2022.
As the price of bitcoin dropped to about $16,000, many investors pulled out of the markets, arguing that crypto was too risky.
The industry has since benefited from the enthusiastic support of US President Donald Trump, who has launched or backed several tokens and appointed crypto-friendly officials in Washington.
Crypto investors predict that the stablecoin legislation will pave the way for Wall Street banks, money managers and other companies to invest in digital assets or create their own tokens.
The heads of Bank of America, Citigroup and JPMorgan Chase have signalled that they would create their own stablecoins once the Genius Act is signed into law.
“Massive wins for crypto in the House,” venture capitalist and Trump-appointed crypto and artificial intelligence tsar David Sacks wrote on X in response to this week’s legislative blitz.
Trump is also preparing to sign an executive order that would open up the $9tn US retirement market to crypto and other alternative investments.
However, critics have warned that tying crypto closer to traditional finance poses grave risks in the event of another market crash. Democrat senator Elizabeth Warren said that the Genius Act “lacks the basic safeguards necessary to ensure that stablecoins don’t blow up our entire financial system”.
She also argued that the issuance of stablecoins by private companies risked “concentrating too much economic power in the hands of a few”.
Trump received hundreds of millions of dollars in campaign funding from crypto executives and has vowed to make the US the “crypto capital of the world”.
The crypto industry — including groups such as Coinbase, Binance and Crypto.com — faced a series of lawsuits under former president Joe Biden’s administration.
During the second Trump presidency, those cases have all been dropped.
Additional reporting by Ray Douglas
