INTRO: Bitcoin (BTC) moved past the $30,000 level for the first time since 10 June 2022 as last month’s turmoil in banking sector subsided further into the distance and investors became more optimistic about US central bank monetary policy.
The largest cryptocurrency by market capitalization was recently trading at $30,237, up 6.75% over the last 24 hours.
Richard Mico, the US CEO, and chief legal officer of Banxa, a payment-and-compliance infrastructure provider for crypto, said that it was clear that the market was pricing a slowdown in growth, and in turn a loosening of monetary policy by the Federal Reserve over the course of 2023. “A look at the bond market proves this,” Richard added.
The US bond market showed that the Two-Year Treasury note having fallen to below 4% from a peak above 5% in early March as traders rapidly reversed their expectations of future USFED rate hikes.
Richard said: “There will likely still be a lot of liquidity injected into the market as a result. Already, Bitcoin has been the best-performing asset of 2023, and it usually is the asset that responds most quickly and violently to these kinds of monetary shifts.”
According to a CoinDesk report, Bitcoin last topped $30,000 in June last year as it was on its way down to below $20,000, where it spent large parts of late that year and into the first weeks of 2023. It has been hovering around $28,000 for the past three weeks as wary investors gauged the impact of a near banking meltdown, continued inflationary pressures and other macroeconomic uncertainties. Bitcoin is up about 80% year-to-date after starting 2023 changing hands at about $16,600.
The crypto surged in January amid signs that inflation was waning, stalled in February but then regained momentum in late March following the failure of Silicon Valley and Signature banks as some investors questioned the stability of the current monetary system and regained their appetite for assets that hold their value. Gold has also recently spiked, topping $2,000 for the first time since 2020, the report noted.
Richard said that there was certainly a narrative shift happening because of this banking crisis that is feeding into Bitcoin’s momentum. “Increasingly, BTC is also being seen as a reliable store of value that lacks the issues that come with storing your money by way of a third-party intermediary, or a bank,” he added. “BTC is now properly starting to be perceived as a risk-off asset,” he added.
He further said: “De-dollarization is also increasingly becoming part of the narrative, which is further accelerating BTC adoption. With BTC, in short, you are your own bank. It’s difficult to make predictions given the volatility of late, but I wouldn’t be surprised if this momentum regarding BTC continues.”