Bitcoin thrives in chaos, breaks above US$28,000 for first time since June
- Bitcoin topped US$28,000 on Sunday and since the start of the year its price has risen almost 70 per cent
- In 2022, a series of bankruptcies and scandals pushed the price of bitcoin down more than 60 per cent
Turmoil in the banking sector, hotter-than expected inflation data and renewed hopes for a dovish Federal Reserve has bitcoin reaching levels not seen in about nine months.
The largest digital asset topped US$28,000 for the first time since June 2022, trading for as much as US$28,258 on Sunday. Since the start of the year, bitcoin’s price has risen almost 70 per cent. Other digital assets rallied as well – with ethereum up about 17 per cent since the start of last week and so-called altcoins like Solana and Cardano advancing, too.
Traders waded high levels of uncertainty last week in markets. US two-year yields fluctuated wildly, and the Cboe Volatility Index, the so-called fear gauge also known as the VIX, spiked above 30. But bitcoin kept steadfast – and straight up.
“Bitcoin is correlated with liquidity conditions and real rates. Real rates have declined, liquidity conditions have expanded, and it looks as if we’re entering a new regime,” said Ilan Solot, co-head of digital assets at Marex.
Broader markets fluctuated in the past week after a handful of US lenders failed, and fresh concerns arose around Credit Suisse Group before UBS Group agreed to buy its fellow Swiss bank on Sunday. In the fallout, some investors have called on the Fed to pause interest rate hikes. But midweek data showed that core CPI advanced more than expected, a reminder that the fight against inflation is far from done. It is unclear how the central bank will respond to the conflicting signals at this week’s Fed meeting.
That uncertainty troubled many corners of the financial world, but emboldened bitcoin bulls who see the digital asset as a hedge against inflation, despite last year’s evidence to the contrary. In 2022, a series of bankruptcies and scandals pushed the price of bitcoin down more than 60 per cent.
The token also rose in spite of internal strife in the digital asset space. USD Coin briefly lost its peg with the US dollar this month, and the US Securities & Exchange Commission is doubling down on the belief that most digital assets qualify as securities.