Excess stocks and gold.. “Bitcoin” is up 50% since early 2023 #chinwa.tech

Bitcoin is up 50% this year so far, despite the collapse of major crypto-focused banks, outperforming stock indices, major commodities, and gold.

On the first day of 2023, Bitcoin was trading at just over $16,500. On Wednesday, the price was hovering around the $25,000 mark, thanks to a rally that began on Sunday.
This year’s price increase comes after bitcoin plunged 65% in 2022, following several major projects and hedge fund collapses, bankruptcies, liquidity problems, and the bankruptcy of FTX, one of the largest cryptocurrency exchanges. greats of the world

The recent rally was somewhat surprising, given the closure of Silvergate and Signature, two of the largest lenders in the cryptocurrency sector. The Silicon Valley bank, which is considered the “backbone of the emerging tech industry,” also failed.

“Bitcoin’s 50% rise in 2023 is a reflection of how battered it was after the FTX crash, changing interest rate expectations and the Silicon Valley bankruptcy,” said Anthony Trenchev, co-founder of the Nexo cryptocurrency trading platform.

Since its peak of almost $69,000 in November 2021, Bitcoin is still down more than 60%. Here are some of the main reasons for Bitcoin’s rally:

bank collapse

While the collapse of US banks Silvergate, Signature Bank and Silicon Valley Bank shocked financial markets, bitcoin’s recovery could also be fueled by those same failures, according to Vijay Aiyar, vice president of corporate development and international partnerships at The cryptocurrency. exchange «LUNO»

He added: “The events of the past week regarding the bankruptcy of SVB and other banks also highlighted the power of decentralized currencies that people can fully own and own,” noting that “decentralized finance is starting to spread in terms of the concept between people. now.”

Bitcoin is called a decentralized currency because it is not issued by a single entity, such as a central bank. Instead, it is based on an underlying technology called “blockchain” and its network is maintained by the community.

US regulators had to step in to guarantee customer deposits at these banks. “The intervention reminded investors of the structural inefficiencies in the US banking system and the US dollar that supports it, which are among the reasons why we have seen Bitcoin soar this week,” Nexo’s Trenchev said. .

Proponents of Bitcoin have claimed that the digital currency is a way for investors to protect themselves from central bank moves, especially quantitative easing and loose monetary policy, which they say “undermines the value of fiat currency.” Supporters point to bitcoin’s limited supply as a primary advantage of being a store of value

interest rate forecasts

The bank collapse came a year after the US Federal Reserve raised interest rates. The problem with SVB was that it had to sell assets, such as Treasuries, to shore up its balance sheet after the plaintiffs withdrew the money. But he sold those assets at a big loss, because rising interest rates pushed down the price of Treasuries.

Some analysts have suggested that “pressure on the financial sector could slow the pace of Fed rate hikes, which could help riskier assets like stocks and bitcoin.” This came even after Federal Reserve Chairman Jerome Powell said days before the banks collapsed that “interest rates are likely to be higher than policymakers expected.”

Steve Eisman, the Big Short investor, says that if the Fed is afraid to raise interest rates, you should be afraid that there is a big beneficiary of the banking crisis so far.

For his part, Trenchev believes that “in a few days we have gone from a hawkish Powell to an environment in which economists expect the Fed not to raise interest rates in March, which benefits Bitcoin.”

He adds: “It has been said that the Federal Reserve will only stop raising prices when something breaks, and now that something breaks, the focus has shifted to Bitcoin.”

Bitcoin vs stocks

Bitcoin is up 50% this year so far. In contrast, the high-tech Nasdaq, with which Bitcoin has been closely associated in the past, is up 12% this year so far. The Standard & Poor’s 500 Index rose 2.5%.

Gold, seen as an asset investors turn to in times of market turmoil, has risen just over 3% this year.

There aren’t many commodities or stock indices that have outperformed bitcoin. In terms of individual shares, Meta shares are up 60% this year so far.

Among the major cryptocurrencies, ether is up 42% this year, while the price of Solana is up more than 100%. (Agencies