If there is any asset that has benefited from the stock market storm, it is clearly bitcoin. The king of cryptocurrencies has accelerated in the last two weeks in a ‘rally’ that has caught the market off guard, which was imbued with the banking panic. This virtual currency has registered a rise of almost 40% since last March 9, experiencing its best recovery since 2021, and raises its share of the total cryptocurrency market above 46%, when at the beginning of the month slightly exceeded 41%.
The transfer comes mainly from retail cryptocurrencies, as well as the USD Coin, linked to the US dollar, which goes from representing 4% of the total market to less than 3%. This ‘stablecoin’ that seeks its parity with the dollar, although it was not recognized by the US Government, suffered a strong bump during the weekend of the intervention of SVB Financial, reaching a price of 0.9 dollars. The bankruptcy of Silvergate Bank, which had become one of the leading lenders in the sector, had not set a good precedent. He was transported from the first victim of the US banking system and more specifically since the bankruptcy of FTX which, since its fall last November, had seen a massive deposit flight take place.
A day later came the intervention of SVB Financial, one of the benchmark banks in Silicon Valley to which CoinBase and Circle, owners of the aforementioned USC Coin with accounts worth $3.3 billion, were exposed. After the initial scare, the FDIC’s response announcing that it covered all deposits infused the market with optimism, rekindling the flame of cryptocurrencies.
Thus, despite the initial doubts at the time of the stock market collapse of the aforementioned SVB Financial, in which it was about to lose the barrier of those, it is already looking towards 30,000 dollars. “Retail investors may be looking for opportunities where they can be found,” says eToro analyst Simon Peters.
Although cryptocurrencies operate outside of regulation, their behavior is conditioned by what happens in fixed and variable income. Part of the investors resort to bank loans to buy these coins, so monetary policy decisions and inflation do influence their price. Now that the Federal Reserve has hinted that interest rate hikes may be coming to an end, “the pressure on crypto assets is easing, making them the best performing asset class so far this year.” ”, defends Peters.
The virtual currency started the year starting at $16,000, a level that has almost doubled in three months, returning to the ‘crypto’ market over the trillion capitalization it lost after the Terra-Luna crisis. A movement that, according to Peters, has been achieved in part by the liquidation of short positions in futures, which “added more buying pressure.” If it exceeds the barrier of $30,000, it would be placed at a maximum of July 2022, 50% so far this year.
While Peters cautions that the full extent of this financial crisis remains to be seen, “the inevitable echoes of 2008 have many anticipating a turnaround in crypto-investor fortunes,” as well as a revival in bitcoin use in particular. In any case, he believes that it is still “too early” to know if they are out of danger after the coup at the end of 2022. The contradictions of the SEC, the US Securities and Exchange Commission, can erase the path obtained with a stroke of the pen.