Bitcoin posts best week since January 2021

Cryptocurrencies resumed their rally on Friday, climbing above $26,000 for the second time this week.

Bitcoin ended higher by 7.46% at $26,868.39, according to Coin Metrics. It posted a weekly gain of 34.13%, and the best week since January 2021, which was just before the first bull run of that year.

Ether rose 3.87% to $1,745.57. For the week, it ended up 22.88%, the best weekly gain since August 2021.

Prices climbed even as shares fell on Friday, as traders digested the future of Credit Suisse. The bank’s fate continued to weigh on investors even after the troubled lender said it would borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank.

“Bitcoin is very liquidity sensitive and the liquidity outlook has improved,” said Dessislava Aubert, an analyst at crypto data provider Kaiko. “Data showed yesterday that the Fed’s assets have increased by roughly $300 billion… While the new BTFP facility is not outright QE, the Fed is essentially injecting liquidity into the banking system, lending more than the collateral provided is worth in market terms.”

“China is also adding liquidity by lowering the reserve ratio for banks,” she added. “So essentially it’s a sentiment-driven move.”

Yuya Hasegawa, an analyst at Japanese crypto firm Bitbank, said a close above $26,000 for bitcoin could signal the beginning of a bull market. Fairlead Strategies’ Katie Stockton said two consecutive bars above $25,200 – this coming Sunday and next – could signal a bullish long-term trend.

Investors have welcomed resilient crypto prices amid the banking crisis this week. The week started with the closing of Silicon Valley Bank and Signature Bank late Sunday, but the focus was on First Republic Bank throughout the week. Late Thursday, several major US banks stepped in to help it with $30 billion in deposits.

Many have suggested that bitcoin is undergoing a narrative shift in the banking crisis. However, the cryptocurrency’s price movements are still heavily influenced by inflation and interest rate increases by the Federal Reserve.

“I still don’t see enough evidence to believe the Fed will pull back on its higher-for-longer stance, even if it stops raising rates,” said Callie Cox, US investment analyst at eToro. “High rates are tough for speculative crypto to survive in. I also think it’s extra important to understand how your investments make money, and what the risks are. High rates can break the herd, and the big ones can get bigger. We’re essentially seeing it’s happening in the traditional banking system right now.”