Bitcoin hits nine-month high amid banking crisis
Bitcoin Hits a Nine-Month High as Banking Industry Turmoil Adds to the Rally That the Leading Crypto Has Seen 70% Since the Beginning of 2023
- Bitcoin rose to $28,554 on Monday, its highest in nine months
- It is up 70% year-to-date and 40% since its last low on March 11
- Potential need for quantitative easing may be behind bitcoin’s rise, analyst says
Bitcoin has surged to its highest price in nine months in the wake of the ongoing banking turmoil in the US and Europe.
The world’s largest and best-known cryptocurrency rose to $28,554 yesterday, its highest since mid-June last year, but fell 0.3 percent to $28,085 on Tuesday afternoon.
The latest rally sees bitcoin up 70 percent since the start of the year and 40 percent above its most recent low of $20,195 on March 11.
Bitcoin has hit a nine-month high in the wake of the unfolding banking crisis
Revival: Bitcoin is up 70% since the start of the year
Other cryptocurrencies have also gained ground, with Ethereum up around 50 percent since the start of the year and Binance Coin up around 35 percent.
The recent surge follows a bad year for bitcoin in which the cryptocurrency followed the defeat of tech stocks and plunged below $16,000 in the wake of the collapse of cryptocurrency exchange FTX in November.
It fell 65 percent in 2022 as a whole — its worst performance since 2018, when it plummeted 73 percent.
But in recent months, bitcoin has seen an uptick. Analysts attribute the rise to a reversal of last year’s situation, when the market was on the brink of aggressive rate hikes, weighing down on technology stocks and by extension, cryptocurrencies.
Simon Peters, a crypto analyst at investment platform eToro, said: “We have now undoubtedly seen an inflation spike in the US and while some components are sticking, we are now starting to see the overall numbers falling.
“This makes us see the opposite of what we saw in 2022.
“As we move closer to a final rate, the pressure from technology and crypto is easing and this has resulted in them being the best performing asset classes so far this year.”
The most recent rally is also attributed to turmoil in the US and European banking systems, Peters says, which may force central banks to restart quantitative easing.
This week, UBS last night included Credit Suisse in a £2.7bn bailout deal ‘to safeguard financial stability and protect the Swiss economy’.
It follows the collapse of three US regional banks in quick succession: Silvergate on March 8, Silicon Valley Bank (SVB) on March 10, and Signature Bank two days after that.
Meanwhile, US regional bank First Republic was awarded a £25 billion lifeline from major US banks last week.
This backstopping by banks and the potential need for quantitative easing by central banks “has contributed to the upside momentum with crypto prices,” Peters said.