LONDON: At the turn of the year, bitcoin was in the grip of a bleak midwinter, down and out after a 2022 defined by tumbling crypto prices, bankruptcies and corporate scandals.
Less than three months later, bitcoin’s got its mojo back. With gains of more than 70 per cent so far this year, it has outpaced other major assets and was on Wednesday (Mar 22) trading near its highest in nine months.
The original and biggest cryptocurrency has been here before, its 15-year history peppered with dramatic price increases and equally vertiginous drops. Fuelling the gains: Interest rates.
Markets expect that central bank hikes to the cost of credit are nearing their peak, and such a scenario is set to buoy risk-on assets such as bitcoin, six investors and analysts from crypto and traditional finance told Reuters.
“The macro narrative is the number one,” said Noelle Acheson, an economist who has tracked the crypto sector for seven years. “Bitcoin is not just a risk asset, it is arguably the most sensitive to monetary liquidity out of all of the risk assets.”
Other factors are at play, too, from turmoil in the banking sector to enduring hopes – still unfulfilled – that bitcoin can achieve wide usage as a form of payment.
Bitcoin closed its best week in four years on Sunday, and has gained 45 per cent in just 12 days.
As the collapse of US lenders Silicon Valley Bank and Signature Bank helped to trigger the takeover on Sunday of 167-year-old Credit Suisse by rival UBS, claims that bitcoin is an asset immune to risks in traditional finance have gained traction.
“It’s rather narrow-minded to say that bitcoin is going to succeed because a bank failed,” said Usman Ahmad, CEO of Zodia Markets, the crypto exchange of the venture arm of Standard Chartered and Hong Kong crypto firm BC Technology Group.
“But confidence is almost a critical factor – confidence in the banking system has been damaged.”
Source By https://www.channelnewsasia.com/business/bitcoin-crypto-currency-exchange-latest-surge-3366246