The fears that generated the bankruptcy of Silicon Valley Bankdo not seem to have weighed on the market for cryptocurrencies and especially in Bitcoin. In the last 7 days, the price of the top 20 cryptocurrencies grew more than 30%. Is it time to buy?
Since the closure of Silicon Valley Bank was announced on March 10, Bitcoin has risen more than 30% and has recovered levels not seen since 2022.
A rise that may be due, experts say, to various causes. The first, the injection made by the Fed and the US Treasury to Silicon Valley Bank to avoid a systemic crisis in an environment in which investors continue to perceive the prospect of a scenario of lower rates as an incentive to bet on these cryptocurrencies in a particularly hectic banking context and with fear of contagion everywhere. And finally, some say that behind the momentum of the main cryptocurrencies is the fact that traders have made large hedging operations against a foreseeable imminent fall in price when the price was around US$20,000 and the rise could be due to a short closing. In the last 24 hours, Bitcoin exceeds $27,000.
Morgan Stanley has assured this week that this should be the time to “shine” cryptocurrency as concerns grow for traditional banks, especially when you consider that Bitcoin was intended as a way for people to keep value in a private digital wallet without the need for an intermediary to store it for them or allow them to transact.
In practice, “bitcoin is not isolated from the traditional banking system”, since it its price is supported by “bank liquidity in dollars, which makes it work as a speculative asset instead of a currency”, the report maintained. In their view, this week’s rally was driven by a small number of market participants and likely favored by strangulation of short positions rather than a “significant change in trading dynamics,” the report added. . (A short squeeze occurs when an asset rises in price and short investors are forced to cover their positions at a loss.)
Regardless of the reasons behind this rise, which has already accumulated more than 57% since the beginning of the year, it is still far from the levels reached in 2022 when levels of even $100,000 were expected as a target for the cryptocurrency.. The increases in interest rates initiated by the central banks affected financial assets and, with special force, Bitcoin. And it is that, contrary to the original idea, Bitcoin has a positive correlation with risky assets.
“In general, a streak of bitcoin dominance is considered a healthy factor for the cryptocurrency market, as it indicates that conditions in the market are relatively low (cryptocurrency traders are choosing to buy bitcoin over other more altcoins). speculative,” FundStrat Research said in a tweet on Tuesday. FundStrat said the rally could reflect that investor interest in bitcoin “is rekindling just as traditional banks like SVB are failing.”
The most outstanding cryptocurrencies this week
- Wrapped Bitcoin: +33%
- Bitcoin: +30%
- Binance Coin and Avalanche: +22%
- Ethereum: +21%
- sunshine: +20%
- Polkadot: +19%
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