Bitcoin Rises Above $28,000 Is It A Bank Safe Haven?
Bitcoin climbed to its highest level in nine months on Monday as some investors saw the cryptocurrency as a safe haven from the current chaos ravaging the global banking system.
It hit a Monday morning high of $28,414 and was still about $28,000 at 5pm ET. Over the past week, the largest cryptocurrency has risen more than 15%, and since the beginning of January, it is up 69%. Its all-time high was $69,000 in November 2021, and its all-time low was $15,649 in November 2022.
After heavy losses in the last quarter of 2022, bitcoin is by far the asset’s best year to date, according to a research note Friday from Goldman Sachs, outperforming gold, the Nasdaq 100 and stock market favorite Tesla ( TSLA ).
The coin is catching air in a turbulent environment that analysts and investors increasingly say will be good for risk assets, especially after the closure of three US banks, the takeover of Swiss bank Credit Suisse by its larger rival UBS and uncertainty over this week’s decision by the Federal Reserve about the direction of interest rates. The Fed also said on Sunday it would increase the frequency at which it lends USD swaps to other central banks, an indication of increased demand for dollars.
“Bitcoin is surging as Wall Street becomes more aggressive in pricing Fed rate cuts and as concerns in the banking sector drive some into alternative investments away from traditional finance,” said Edward Moya, senior market analyst for Oanda.
Bitcoin is the world’s largest cryptocurrency, accounting for 47.7% of the $1.17 trillion market. The asset has not represented such a high proportion of the total value in digital assets since June 10, 2022, according to TradingView.
It also benefits from the view that it is the safest of the cryptocurrencies, according to Noelle Acheson, author of the Crypto Is Macro Now newsletter. Smaller cryptocurrencies face more regulatory scrutiny and governance uncertainty, she said.
Some investors see bitcoin, like gold, as a good place to park money during periods of high inflation, added Sean Farrell, head of digital assets at Fundstrat. The 30-day rolling correlation between bitcoin and gold is rising, according to data from Fundstrat, while the correlation between bitcoin and the Nasdaq is falling. Historically, bitcoin has had a closer correlation with the Nasdaq than gold.
“Investors are increasingly turning to BTC and gold as alternative ways to store wealth during periods of inflation or increased risk,” Farrell said in a research note on Friday.
James Lavish, managing partner of the Bitcoin Opportunity Fund, is dubious. “As much as some Bitcoiners would like to believe that the banking crisis has driven people towards Bitcoin as a flight to safety, I don’t think we’re quite there yet,” Lavish told Yahoo Finance via email.
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