Bitcoin bulls seem to be feeling more confident, after BTC managed to surpass the $30,000 mark again yesterday. Since yesterday however, its price has dipped back below $29,000. In the first major downturn of the market recovery since the start of 2023, crypto prices had been slipping downwards last week after hinting by the Fed that more interest rate hikes could be on the way. BTC had met resistance near the $31,000 mark.
The causes for the renewed optimism are varied, but one of the strongest influences is renewed concerns for the banking sector. Since the beginning of the week, shares in First Republic Bank have further plummeted by 60% – meaning that its share price has now fallen by over 95% YTD. The bank had reported a major slump in deposits and more than $100bn of outflows in the first quarter, which had investors spooked. As a result, investor interest in hedge assets like Bitcoin increased on fears that the instability could continue.
Is the coast clear for a market recovery?
The question on everyone’s minds now is whether 2023 will continue to be a year of resurgence for the crypto market. Things are looking positive, but some analysts including those at Morgan Stanley have said that considerable selling pressure is continuing to weigh down on the sector.
Others however have had more optimistic predictions. British bank Standard Chartered has said that it believes this crypto winter will be the last one we ever see, as increasing regulation will make dramatic “boom and bust” cycles less pronounced. Some predictions have BTC reaching a price of $45,000 before the end of the year, but uncertain economic conditions will likely contribute to its volatility as the year progresses.
(About Bitcoin)
Bitcoin is the original decentralized digital currency that was invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto. It operates on a decentralized peer-to-peer network, meaning that transactions can occur directly between users without the need for intermediaries like banks. Bitcoin uses cryptography to secure transactions and to control the creation of new units of the currency. Transactions are recorded on a public ledger called the blockchain, which allows anyone to verify the validity of a transaction and the ownership of bitcoins. The total supply of bitcoins is limited to 21 million, which is expected to be reached around the year 2140. Bitcoin’s price is highly volatile, and it has experienced numerous boom and bust cycles over the years.
