PH crypto market booms as bitcoin soars to $69,000

Manila, Philippines Bitcoin's recent rally above its 2021 peak at $69,000 (P3.85 million) is increasing interest within the Philippine cryptocurrency space, attracting the attention of larger financial institutions eager to join the sector.

The world's most famous digital asset, famous and reviled for its wild price swings, is leading the charge while elevating domestic players in the industry.

Philippine Digital Asset Exchange (PDAX), one of the largest cryptocurrency exchanges in the Philippines, has seen a dramatic increase in activity in recent months, said its founder and CEO Nichel Gaba.

“We are seeing volume triple or quadruple these days,” Gaba, a former investment banker who founded PDAX in 2018, told the Inquirer.

Bitcoin, long a haven for small investors with an intense appetite for risk, is beginning to attract the interest of large national institutions.

Interested financial institutions

“Locally, there are financial institutions that are starting to think about making a small allocation in Bitcoin. “It’s an insurance company and a couple of family offices,” Gaba said.

A family office is a private wealth management advisor that serves ultra-high net worth individuals.

Gaba said PDAX has more than two million users, which is several times the size of the largest brokerages in the country, underscoring the growing popularity of the sector among Filipinos.

READ: Dollar falls as data weighs; Bitcoin pulls back after hitting new high

He said the exchange's monthly volumes reach more than $100 million or about P6 billion, less than the volumes on the Philippine Stock Exchange, due to the absence of large institutions.

However, Bitcoin and alternative digital tokens known as Altcoins are generating significant competition for the PSE.

“Retail investors' attention is really divided between cryptocurrencies and Philippine stocks,” Nicky Franco, head of research at brokerage Abacus Securities, said earlier this year.

"Of course, we prefer retail investors to focus on stocks, but we can't really blame the retail investors who are taking advantage of the opportunities offered by the crypto space," he added.

Crypto vs stocks

Over the past year, the price of Bitcoin has surged more than 230 percent to a record high last Tuesday, driven by massive inflows after US regulators allowed the establishment of Bitcoin exchange-traded funds earlier this year.

READ: Mystery, scandals and speculation: bitcoin's record

The price immediately plunged more than 14 percent, but recovered to around $66,200 on Thursday.

"It validates one of the opinions going into this cycle, which was that the approval of ETFs will attract many traditional and institutional investors," Gaba explained.

He said investors thinking about entering this space should always consider their exposure and risk appetite.

"Do not invest money that you are afraid of losing because it remains a very volatile asset despite all the enthusiasm," Gaba said.

Around 6.9 million Filipinos used cryptocurrencies in 2021, according to a report by the National Tax Research Center, which cited data from digital payments company Triple-A.

Many Filipinos also have exposure to the industry through allied digital assets known as non-fungible tokens or NFTs. The most popular of them is the NFT game Axie Infinity, which attracted tens of thousands of Filipinos looking for extra income during the pandemic.

As the value of the native Axie Altcoin plummeted during the 2022 cryptocurrency bear market, numerous participants suffered losses and left the game.

Meanwhile, the Securities and Exchange Commission is cracking down on unregistered exchanges, including leading global platform Binance, if they do not obtain the necessary licenses to operate.

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The SEC's warning last November came a week after Binance CEO Changpeng Zhao pleaded guilty to violations of US anti-money laundering regulations, leading him to resign.

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