Bitcoin Price Soars To $24,700

Bitcoin, the world’s biggest cryptocurrency by market cap, has been making headlines lately due to its remarkable surge in price in the past week. In the past week, following the Silicon Valley Bank’s and Silvergate Bank’s collapse, Bitcoin has witnessed double-digit growth and was even able to cross the $26,000 mark on Tuesday taking it to its highest point in the past nine months since June of 2022.

However, the coin again fell back to the $24,000 level after hitting a nine-month high of $26,533 on Tuesday and is again (slowly) marching towards the $25,000 level. The coin as of now is up by 0.39% in the past 24 hours.

Bitcoin’s rapid price hike this week comes as great news for the crypto community as its movement corresponded with the surge in prices of various other cryptocurrencies and also enabled the crypto market to the $1 trillion market valuation.

Why is Bitcoin Surging?

There are a lot of independent factors that are working towards the upward campaign of the world’s biggest cryptocurrency. From the Fed’s statement to secure the interests of the crypto investors affected by the collapse of Silicon Valley Bank, and Silvergate before that, to the decline in the rise of interest rates in the US, the crypto market finds itself in the best place after a year-long crypto winter.

SVB collapse

The Silicon Valley Bank, with over $175 billion worth of deposits, collapsed on 10th March this year and put a lot of crypto investors who have invested in the stablecoin USDC at risk. $3.3 billion worth of USDC shares, amounting to 8.2% of its total supply, were claimed to be held as reserves with the collapsing SVB.

Despite being the 2nd largest stablecoin, USDC depegged and traded as low as 88 cents upon the SVB collapse. Before SVB’s fall, the Silvergate bank, with almost 30% of its deposits coming from the crypto industry, also suffered the same fate. The Fed while addressing the concerns of crypto investors has ensured that it will make sure to protect both insured as well as uninsured depositors from bearing any losses.

“All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.”

Failures of such huge banks have made investing in cryptocurrencies seem more lucrative and the Fed’s recognition of covering the possible damages to the crypto investors due to failure of banks has also gone on to bolster the spirits of crypto investors.

Inflation

The Inflation across the Atlantic had been the primary reason behind the slow and often times, the downward movement of the crypto market. Having been grappled in the clutches of inflation for more than a year, the FED through FOMC had no choice but to increase the interest rate which would decrease the money supply.

The increased interest rate has the effect of increasing the value of money and makes investor more particular about their investments. Investors, with increase in interest rates, tend to go for safer investments and give less consideration to crypto options.

The FOMC since the past year has increased the interest rate by manifold in bid to bring down inflation to 2%. The committee led by Fed chairman Jerome Powell, has increased the interest rate by 25 bps in the last sitting, by 50 bps in December and by 75 bps each in the four sittings before December. The decline in the intensity of interest rate hikes by FOMC since December however has helped in the recovery of the crypto market in 2023.

The US Inflation (CPI) grew the lowest rate in February, 2023 since the September, 2021. The CPI growth for the month of February only increased by 6.04% as opposed to January when it hiked by 6.4%. The decrease in the growth rate of CPI comes as relief for the crypto market as the same would translate to further lowering down the increase in the interest rate by the FOMC.

Bitcoin’s Price Surge: A Great News

The recent surge in Bitcoin’s price is significant not only for investors, but also for the broader cryptocurrency market as a whole. The rise in price indicates a growing interest in digital assets, not just limited to Bitcoin. Other cryptocurrencies such as Ethereum, Litecoin, and Ripple have also seen significant gains in recent days.

This surge in Bitcoin’s price is also significant because it marks a turning point for the asset. After a difficult year in 2022, the recent gains are a sign that the asset is once again on the rise. The coin has remained under the $30,000 mark since the Luna crash.

Having surged by 41% since January, many investors are optimistic about Bitcoin’s performance in the coming months. Some even predict that it could reach new all-time highs. However, the market remains volatile, and the price of Bitcoin and other cryptocurrencies can fluctuate rapidly.

Conclusion

Bitcoin, being the face of the crypto market, has always been affected the most by events and news concerning the overall crypto market. Events like the Luna Crash in June 2022 and the FTX crash in November 2022 have caused Bitcoin investors to incur huge losses in the short run. However, Bitcoin investors are also the ones who profit the most in case of a positive news concerning the market.

The coin’s recent price movements paint a positive picture of its price movement in the months to come and the US government’s move to secure the interests of crypto investors (by saving them from losses from bank failures) and the relaxing of its interest rate would go on to increase the confidence of investors greatly.