Bitcoin rises above $28,000 for the first time since June
Yahoo Finance’s David Hollerith joins the Live show to discuss the rise in bitcoin and the outlook for crypto amid the banking crisis.
Video transcription
RACHELLE AKUFFO: Keeping an eye on Bitcoin moving higher today, the cryptocurrency rallied last night following the announcement that Swiss-based bank UBS reached an agreement to buy rival Credit Suisse. Also in focus is the potential interest rate break or interest rate increase from the Federal Reserve. For more on its impact on the crypto market, let’s go to Yahoo Finance’s David Hollerith. Hi, David.
DAVID HOLLERITH: Hi Rachelle. So it’s been a very interesting last 10 days, I guess, we could say, for Bitcoin. It has been on a tear. And there are two things going on here. And one is the fact that we have been in – within a couple of weeks of what we would call a banking crisis. And that has obviously changed how the Federal Reserve may need to respond in its upcoming rate hike decision set for Wednesday.
And so as a risk asset, a lot of analysts that I talk to or I’ve talked to have said that Bitcoin and other risk assets are poised to do well in the near future. Technology stocks have benefited somewhat from this, but Bitcoin has far outperformed other assets. Goldman Sachs released a research note on Friday before Bitcoin sort of crossed that $28,000 barrier, pointing out that it was, far and away, the most effective asset in 2023 so far, so year to date. So that’s interesting.
And then we have this other kind of story, which Bitcoin diehards believe, which is that Bitcoin is–the intent was, when it was created, to kind of not be in government control. And given that we’re seeing a kind of banking crisis issue, Bitcoin is kind of seen, again, as a safe haven. That said, it’s– investors have been thinking about it that way for a long time now. And it is often discussed. And in the last two years it was debunked.
But it looks like it’s– that narrative is kind of coming back into the market. I think the problem with deciphering the two is that it really comes down to the fact that both are happening right now. So in terms of Bitcoin’s trajectory, things are obviously looking good for it. We are going to need more data before we can see if people – investors are moving to it as a safe haven.
But interestingly, there is correlation. So how much does it move compared to gold in the NASDAQ, the NASDAQ, you can think of it as technology stocks, gold. It is traditionally seen as a safe haven. That has been correct – Bitcoin has correlated more with gold recently and less with the NASDAQ. So there’s been a change we’ve seen in the last two weeks. And we will continue to look at it. But overall, compared to other cryptoassets, Bitcoin is definitely seeing the highest bid right now.
RACHELLE AKUFFO: I certainly didn’t expect Bitcoin to go back to being the safe haven after the wild ride it’s been on then. So what are the expectations here? We know there are all these astronomical predictions about where Bitcoin could go. However, how much more of this do we need to see before we can say, yes, this could indeed be the tipping point for crypto?
DAVID HOLLERITH: Yes, that’s a good question. I mean, I think if you look at the crypto market, at Bitcoin, including a few — about a month ago, things didn’t necessarily look that bright. And now we have people coming out with a $1 million price target in 90 days or 87 days, I guess, is what we’ve seen. And it appears to have about a 1% chance of being true.
But, you know, I think if risk assets benefit and Bitcoin is not something that’s as connected – I mean, it’s less disconnected from the banking system than it’s ever been – I think at least hedge funds will look at it as a way to play a macro narrative that is more favorable to risk assets right now. That’s what it sounds like from what I hear.
RACHELLE AKUFFO: Definitely one to watch and we’ll see what happens when we get that rate break or hike, whatever rate announcement ends up coming from Jay Powell this week. Yahoo Finance’s David Hollerith, thanks for that breakdown.
