Analysts: Bitcoin Will Continue to Benefit from the Banking Crisis
Now that 2023 has arrived, bitcoin has found fresh ground following the ongoing banking crisis that has led to the closure of institutions like Silvergate, Silicon Valley Bank, and Signature.
Bitcoin Could Do Even Better
Many analysts and crypto industry heads believe this banking crisis is going to continue now that Deutsche Bank is at the helm of controversy, and with heavy regulatory issues in play, bitcoin – they believe – could be poised for a solid breakout in the coming weeks and months.
The price of BTC has already risen beyond $28K. That’s about 70 percent higher than where it was at the end of 2022, arguably the worst year on record for bitcoin and many other digital assets. The space lost more than $2 trillion in overall valuation given that assets like BTC shed more than 70 percent of their values. The world’s number one digital currency by market cap was trading at a new all-time high of about $68,000 per unit in November of 2021, though roughly 12 months later, the asset had dropped into the mid-$16K range.
Several additional cryptocurrencies, for one reason or another, chose to follow in bitcoin’s footsteps and shed dollars from their prices. It was a sad and ugly sight to see, and many traders lost everything they had, but since the new year began, it looks like everything is starting to turn around.
One of the big reasons for the sudden change is the banking situation in both America and Europe. Cathie Wood of Ark Invest fame commented in a recent interview:
The behavior of the [bitcoin] price through this crisis is going to attract more institutions. The fact that bitcoin moved in a very different way from the equity markets, in particular, was quite instructive.
Macro Hive also threw its two cents into the mix, stating:
The banking crisis, which caused the market to price in rate cuts starting in the summer, has had little knock-on effect on crypto (so far).
These words followed news that Deutsche Bank experienced a huge dip in its stock share prices over the last few weeks, thus wiping out about one fifth of the bank’s market capitalization.
The Fed Isn’t Helping Things
The situation also isn’t being helped by the Federal Reserve and similar institutions, which continue to hike rates even though the economy is in shambles and nobody can afford homes or cars. Not too long ago, the Fed announced interest rates were going up another 0.25 basis points, and that inflation continues to be a major enemy.
It commented further that despite the state of the country’s banking sector, interest rates would continue to be pushed upward in 2023 unless inflation chose to stop rearing its ugly head. 2023 was initially believed to be a less hostile year in that sense.
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