Synopsis
“With instability in the banking sector, inflation data that exceeded expectations, and renewed optimism about a dovish Federal Reserve, Bitcoin has reached levels unseen in approximately nine months,” Edul added.
Prices of Bitcoin, the world’s most popular and largest crypto by market capitalisation, have picked up the pace again, surpassing the $28,000 mark on Monday for the first time since June 2022. Since the collapse of Silicon Valley Bank on 10th March 2023, Bitcoin prices have zoomed nearly 40%.
“The current BTC rally is driven by the importance of decentralised finance in the global financial system after a series of bank collapses in the US. Bitcoin being the torch bearer of decentralised finance is witnessing a demand from retail and institutional investors amidst the banking chaos as BTC is being deployed as a shield against the ongoing crisis,” Dhruvil Shah, SVP of technology at Liminal, said.
Meanwhile, Edul Patel, CEO and Co-Founder of Mudrex, said, “The collapse of SVB and Silvergate was like a Cyprus moment for crypto. As these crypto-friendly banks collapsed, much money flowed directly into the cryptocurrency ecosystem. And a chunk of the smart money usually flows into blue-chip cryptocurrencies, such as Bitcoin and Ethereum.”
“With instability in the banking sector, inflation data that exceeded expectations, and renewed optimism about a dovish Federal Reserve, Bitcoin has reached levels unseen in approximately nine months,” Edul added.
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View Details »Since the collapse of various regional banks in the US and Europe, global equity markets remained under pressure. Nifty, since 10th March 2023, has declined nearly 4%, whereas Dow Jones remained flat during this time. However, Bitcoin outperformed other instruments.
Rajagopal Menon, Vice President at WazirX, said, “Bitcoin has been rallying due to various reasons. First, the recent bank bailout in the United States has increased confidence in banks and markets, causing Bitcoin prices to soar. Another reason is the official announcement of the Ethereum Shanghai hard fork update date (April 12), which will allow users to withdraw their staked Eth and is expected to stimulate Ethereum market demand.”
However, Ashish Singhal, CEO and co-founder, CoinSwitch, said, “In general, BTC prices have not shown any significant correlation with banking stocks—on the contrary, the crypto market tends to perform better when the traditional financial markets experience turbulence reflecting the transparency and decentralization of the DeFi world.”
“An important factor that could be in play is the expectation of a lower or zero interest rate hike by the US Fed in the next Fed meeting. The continuous rate hikes have had a material impact on the market, both traditional and crypto over the last one year. Therefore, the expectations of a lower or zero hike could also be influencing the BTC prices,” Ashish Singhal, CEO and co-founder, CoinSwitch.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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