Bitcoin rallied to start the week, touched a new 2023 high to end it and suffered a brief drop in between, weighed down by the trouble at Binance. Bitcoin ended the week higher by about 4% after touching a new 2023 high on Friday above $38,000. Meanwhile, ether advanced 8%. Coin Metrics measures a week in crypto, which trades 24 hours a day, from 4:00 p.m. ET on a given Friday to the same time the following Friday. There was an array of events driving the price this week – from the election in Argentina , the minutes of the latest Fed meeting and updates to bitcoin ETF applications, to the Binance settlement and the leadership coup at OpenAI . These things not only highlighted the nuance in bitcoin’s purpose and identity, it also put the crypto industry’s long-standing regulatory woes back in focus for investors. “The thing I’d be focused on over the short term is what kind of news we have on the regulatory front versus what is already discounted by traders,” Zach Pandl, managing director of research at Grayscale Investments, told CNBC. “Are we going to see news that’s positive enough that gives us new price highs given the way people are already positioned?” BTC.CM= 1Y mountain Bitcoin, 1 year For the year, bitcoin is up about 130% even after remaining stuck in a tight range for most of it. Optimism about the likely approval of a spot bitcoin ETF has been building for the past couple months, serving as the biggest catalyst for the cryptocurrency. Pandl (whose company is a key player in the push to get an ETF off the ground with its popular GBTC product) said he thinks the market will continue to get good news on the ETF front. Moreover, as the industry recovers from the black eye FTX dealt it this time last year, regulators are learning how to separate different market participants. “Regulators are very clearly segregating a variety of issues – on one hand, bad actors and parts of the business [of crypto] that we don’t want to see continue, versus the asset management community [and] ETF community, which is just providing a product to the public,” he said. The challenge is that active crypto trader positioning appears long, he added, based on activity in crypto futures, options, open interest and funding rates. “While we may hear more positive news about the prospect of an ETF approval, some of that is priced in so things need to happen sooner or more smoothly for them to incrementally move a price,” he said. Meanwhile, Michael Rinko, a research analyst at Delphi Digital, said this week’s Binance settlement is one piece of evidence of a new narrative forming in crypto regulation, one in which the Biden administration could be starting to view crypto through a similar lens to which they see technology fields like artificial intelligence and semiconductors. It may be a long while before crypto reaches the level of priority as AI, he added, but the latest Binance development is part of an emerging narrative. “Increasingly, the view in from the U.S. government’s perspective is that they’re viewing more and more technology through the lens of national security,” he said. Rinko highlighted examples such as semiconductors and the CHIPS act and increasing engagement with AI leading to restrictions on some of Nvidia’s higher-end chips, and said a similar path could be coming for crypto. Already underway is a sort of regulatory attack on the crypto players the U.S. deems unacceptable, he said, adding it will likely fracture the crypto world into two spheres. “There will be the Western sphere of influence where there’s Coinbase , Kraken and exchanges that have relationships and ties to the so-called West, and then there will be Eastern exchanges that operate outside the influence and control of the U.S. and its allies and are persona non grata from a U.S. perspective,” he said.