Bitcoin has reached its highest level since June as some investors speculate that the Federal Reserve will pause interest-rate increases. The largest cryptocurrency by market value rose 6.6% on Thursday to trade at around $26,300 apiece. Meanwhile, the second-largest cryptocurrency, Ether, gained 3.3%. Investors are increasingly thinking that the central bank’s increasing interest rates could be over due to the failure of two US banks in the past week. Bitcoin’s rise is seen as a high-risk asset among traditional investors due to its volatility, but more money managers are finding it appealing in easing financial conditions.
Important Details about Dow Drops, First Republic and Credit Suisse Plunge –
– Bitcoin rose to its highest level since summer
– Some investors are betting the Federal Reserve would pause interest rate increases
– Bitcoin gained 6.6% from its late-afternoon level on Thursday
– Ether, the second-largest cryptocurrency, gained 3.3%
– Bitcoin is viewed as a high-risk asset due to its volatility
– Investors see it as a better asset when financial conditions are easing
– There are more bets that the Federal Reserve’s rate-increasing cycle could be over due to financial turmoil following the failure of two U.S. banks
– Traditional investors have inquired about bitcoin following the uptick in concerns about the banking sector
– Some cryptocurrencies are tied to the dollar while bitcoin is not reliant on specific banks for users to redeem funds
– Clients are perceiving bitcoin as a safe haven for the first time
– This sentiment was previously seen as a meme among bitcoiners and not taken seriously by the professional crowd.
Bitcoin Surges Amidst Fed Interest-Rate Hike Pause Speculation
The world’s largest cryptocurrency, Bitcoin, experienced an upswing as investors speculated that the US Federal Reserve will put a temporary halt on interest-rate increases. On Friday, Bitcoin’s market value spiked by 6.6% from its late-afternoon ET level on Thursday to trade around $26, 300, which is its highest level since June. On the other hand, Ether, the second-largest cryptocurrency, increased by 3.3%. The cryptocurrency has traditionally been deemed as a high-risk asset due to its high volatility. However, during economic downturns, it is favored by money managers.
Market analysts have noted that Bitcoin’s recent rise, amidst broader market turmoil, is due to investor uncertainty regarding the Federal Reserve’s interest-rate hike cycle. Following the failures of two US banks, many investors have become skeptical of the Federal Reserve’s ability to handle an economic downturn. Consequently, some investors have considered Bitcoin as a hedge against potential economic turmoil.
Christopher Bendiksen, who is the head of Bitcoin research at digital-asset management company, CoinShares, pointed out that more traditional investors have begun to inquire about Bitcoin in recent days. Bendiksen noted that some of these investors perceive Bitcoin as a “safe haven,” which he remarks has been a “meme” among the Bitcoin community for a long time, but has not been significantly endorsed by professional investors.
Bitcoin not tied to Specific Banks
One factor that has made Bitcoin appealing is its independence from banks. Unlike other cryptocurrencies that are tied to the US dollar, Bitcoin can be used without exposure to any specific banking institution. Given the increasing number of banking failures, and the general uncertainty surrounding the banking industry, investors may find comfort in Bitcoin’s lack of ties with any particular bank.
Bitcoin as a Safe Haven
The idea of Bitcoin as a safe haven against economic turmoil is not new, but it has not been taken seriously by mainstream investors. Some have criticized the notion of Bitcoin as a “safe haven” for its extreme volatility in the past. However, the current market turmoil has given rise to a newfound respect for Bitcoin as a potential store of value. Furthermore, the fact that Bitcoin is not tied to any central authority or banking institution has further contributed to its appeal.
The Future of Bitcoin
The current upswing in Bitcoin’s market value may be temporary or it may indicate a broader trend. The cryptocurrency has been notoriously unpredictable in the past and has undergone significant fluctuations in its market value over the years. However, Bitcoin’s recent uptick in popularity among traditional investors may suggest that the cryptocurrency is becoming more legitimate in the eyes of the financial industry.
Moreover, the increasing popularity of blockchain technology, which is the underlying technology behind Bitcoin, may further bolster the growth of the cryptocurrency market. Blockchain technology is being increasingly utilized across various industries, and many experts predict that it will become pervasive in the coming years. Consequently, this may lead to a broader acceptance of cryptocurrencies and Bitcoin as an integral part of the financial landscape.