Crypto winter shows hint of thaw, bitcoin tops $30,000

Crypto winter may not be over, but it could be a sign of spring.

Why it’s important: Crypto was in freefall at the end of 2022 as faith in digital assets suffered from the FTX scandal and the collapse of other notable crypto companies.

The return journey: Bitcoin on Tuesday topped $30,000 for the first time since June.

• It has roughly doubled since the low point in November.

With the numbers: Through April 4, the top 100 digital assets were up 48% in 2023, beating gold (up 11%), stocks (up 8%), high-yield bonds (up 4%) and oil (up 1%), according to the Bank of America analysts Alkesh Shah and Andrew Moss.

• “Over the past month, investors have been focused on recent banking turmoil and financial implications,” the analysts wrote, and “digital assets were likely to benefit from uncertainty … as investors chased price momentum and added risk assets for diversification and as terminal targets interest rate expectations shifted lower than previously expected.”

Meanwhile, investors appear to anticipate that Wednesday’s inflation report could help support the case for the Fed to halt rate hikes, a boost for assets such as bitcoin, Bitcoin Opportunity Fund manager James Lavish told CNBC.

Be smart: When banks go down, bitcoin goes up, Axios Crypto co-author Crystal Kim wrote recently.

• Market experts told them that the number of possible disasters awaiting the United States, combined with investors’ lack of faith in policymakers, is putting the spark back into bitcoin.

The other side: The total market cap for cryptocurrencies – of which bitcoin accounts for over 45% – is still down over 56% from its November 2021 peak, currently at $1.29 trillion, according to CoinGecko.

• And dollar-denominated venture capital crypto investments have fallen significantly since peaks reached just last year, with a marked shift to investments earlier in the company’s life cycle.

The big question: Will the latest upturn last?

• Crypto is preternaturally volatile: There is always uncertainty surrounding whether it might go to zero amid a collapse in confidence or at least face a concerted regulatory crackdown.
• The Bank of America analysts offered this: “Despite the potentially restrictive regulatory frameworks ahead, we expect clear ground rules for digital assets to provide a path to mainstream adoption.”

Bottom line: No matter how many times crypto is left for dead, it seems to keep breathing.