The world’s largest cryptocurrency is up 69% this year as some investors look to bitcoin as a refuge from the chaos of the conventional banking world
Bitcoin climbed to its highest level in nine months Monday as some investors looked to the cryptocurrency as a safe haven from the current chaos roiling the global banking system.
It peaked Monday morning at $28,414 and was still roughly $28,000 at 5 pm 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 low was $15,649 in November 2022.
After steep losses during the last quarter of 2022, bitcoin is far and away the best performing asset year to date, according to a research note Friday from Goldman Sachs, outpacing gold, the Nasdaq 100 and stock market favorite Tesla (TSLA).
The coin is catching air in a tumultuous environment that analysts and investors increasingly say will be good for risk assets, especially after the closure of three U.S. banks, the takeover of Swiss bank Credit Suisse by its larger rival UBS and uncertainty about this week’s decision from the Federal Reserve on direction of interest rates. The Fed also on Sunday said it would increase the frequency it lends USD swaps to other central banks, an indication of increased demand for dollars.
“Bitcoin is rallying as Wall Street becomes more aggressive in pricing Fed rate cuts and as banking sector worries drive some into alternative investments away from traditional financing,” 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 hasn’t represented such a high portion of total value in digital assets since June 10, 2022 according to TradingView.
It is also benefitting 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 view bitcoin, like gold, as a good place to park money during periods of high inflation, added Sean Farrell, head of digital assets with 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 dropping. Historically, bitcoin has had a tighter correlation with 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 Friday research note.
James Lavish, managing partner at the Bitcoin Opportunity Fund, is doubtful. “As much as some Bitcoiners want to believe that the banking crisis has driven people toward Bitcoin as a flight to safety asset, I don’t believe we are there quite yet,” Lavish told Yahoo Finance over email.
Source: Yahoo
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