Bitcoin bounces back as bank crisis looms
While the world came to a halt with the fall of the Silicon Valley Bank, bitcoin holders are smiling all the way. The bank crisis pushed people to alternative means such as crypto. For the first time in months, bitcoin has passed the $28000 level.
There has been so much activity in the crypto landscape on Monday, with bitcoin hitting $28 554 before falling by 2% to $27 705. It is not the only one affected, according to Coinmetrics. Altcoins were also affected, with ether falling by 3.5% to $1756.
March has been a good month for Bitcoin. The first signs of trouble with the Silicon Valley Bank on March 8th made the coin soar by 25%, trading at around $28000. This is the closest it has gotten to $30,000 back in June. Some factors, such as FTX, have negatively impacted the currency. According to Bloomberg, crypto trading volumes are at their peak since the FTX collapse.
There is no doubt that investors are moving to Bitcoin as they find it a safe haven as it is not affected by the regularities. So much is happening to the financial system, such as inflation and recession in some areas. The movement of the US dollar has affected other assets, and most investors are looking for alternatives. Bitcoin, altcoins, and gold are considered safe alternatives. Some investors use Bitcoin as a hedge against inflation due to a limited supply.
According to CoinMetrics, there is a low correlation between Bitcoin and S&P 500, its lowest since September 2021. It indicates that the relationship between bitcoin and stocks is inversely proportional.
In an interview with CNBC, Vijay Ayyar, the vice president of Luno, revealed that there has been a lot of argument on bitcoin being an uncorrelated asset class, but it’s slowly proving itself. After all, bitcoin was created to counter the weaknesses in the financial market.
There are chances that Bitcoin may continue increasing in price with time as more institutional investors roll in their assets for safety.