Bitcoin is up 50% so far in 2023, beating major commodity and stock indices. Industry insiders said the bank failure has prompted investors to look for alternatives to the traditional banking system, and rate hikes are also expected to slow, helping Bitcoin.
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Bitcoin Soared sharply on Wednesday as investors shrugged off initial fears about US regulators’ crackdown on industry giants and became willing to take some risk.
According to data from CoinGecko, the world’s largest cryptocurrency has surged 5% to as high as $28,474 in the past 24 hours. Bitcoin has regained the $28,000 level after falling below it on Monday following news of the US Commodity Futures Trading Commission FTC’s lawsuit against Binance.
Ether, the second largest digital coin, is up nearly 6% to $1,816.10.
Bitcoin has been steadily rising this year after a brutal 2022 that saw major crypto exchanges collapse and prices plummet. Investors have found some comfort at the thought of a reversal of Federal Reserve rate hikes that have been weighing on risky assets like equities.
The reason for the jump on Wednesday was not immediately clear. However, this is happening amid a broad rise in US stocks. Bitcoin is known to follow movements in the stock markets, with investors treating it more like a traditional risk asset.
Nasdaq futures were up 100 points, or 0.9%, on Wednesday morning.
US regulators have ramped up their crackdown on crypto firms of late, with the CFTC suing Binance and its co-founder Changpeng Zhao for allegedly violating trading rules by soliciting customers in the US without authorization.
The Securities and Exchange Commission has also threatened legal action coin base for alleged violations of securities regulations.
“By and large, we’re looking pretty bullish here as Bitcoin is reclaiming $28,000 and looking to target $30,000 next,” Vijay Ayyar, head of international at crypto exchange Luno, told CNBC via email on Wednesday.
“Generally, when price action begins to absorb negative news so quickly, it indicates that the market is bullish and on an uptrend.
Bitcoin had previously been boosted by troubles in the global banking system. Swiss banking giant Credit Suisse was recently bailed out by its competitor UBS in a government-backed cut-rate offer.
Tech-focused US lender Silicon Valley Bank and crypto-focused banks Silvergate and Signature have also failed.
The Federal Reserve has attempted to cushion the blow of the banking crisis with a lending program known as the Bank Term Funding Program, or BTFP, aimed at helping banks meet their obligations to depositors.
Bitcoin advocates say it can serve as a store of value in times of economic hardship and as a form of money that people can access without needing a bank account.
However, it is incredibly volatile and has been known to swing 10% up or down in a matter of hours.
“The market seems to be giving more importance to macroeconomic factors and that the Fed has already started a form of QE now known as BTFP, but also that the rate hike could happen sooner rather than later,” Ayyar told CNBC.
“Given the bank collapse of the last month or so and Bitcoin’s rise, this provides the perfect context for Bitcoin to continue to remain bullish and move higher.”
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Source : www.cnbc.com