Bitcoin Stocks climbed sharply on Wednesday as investors shrugged off early fears of US regulators’ crackdown on industry giants and became more willing to take on some risks.
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According to Coin Metrics, the world’s largest cryptocurrency gained 3.9% to $28,399.63. Bitcoin retook the $28,000 level on Monday after dipping below it following news of the US Commodity Futures Trading Commission’s lawsuit against Binance. Earlier in the day, it had climbed up to $28,637.25.
Ether, the second-largest digital coin, rose 1.7% to $1,808.29.
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Bitcoin continues to rise this year in 2022 following brutal crypto exchange collapses and a sharp drop in prices. Investors have found some comfort at the thought of a reversal of interest rate hike moves by the US Federal Reserve, which put pressure on riskier assets such as stocks.
The reason for the surge on Wednesday was not immediately clear. However, it comes amid a broad rise in US stocks. Bitcoin is known to follow movements in equity markets, with investors treating it like a traditional risk-on asset.
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US regulators have stepped up their crackdown on crypto firms of late, with the CFTC suing Binance and its co-founder Changpeng Zhao for allegedly breaking trading rules by attracting clients to the US without authorization.
The Securities and Exchange Commission has also threatened to take legal action against it. coinbase For alleged violation of securities rules.
“Broadly speaking we are looking quite optimistic here with bitcoin reclaiming $28K and targeting $30K,” Vijay Iyer, international head at crypto exchange Luno, told CNBC via email on Wednesday.
“In general, when price action begins to absorb negative news so quickly, it indicates that the market is bullish and trending up. The CFTC case against Binance, while significant , doesn’t affect the market that much.”
Bitcoin was previously boosted by the crisis in the global banking system. Swiss banking giant Credit Suisse was recently rescued by its peer UBS in a government-backed, cut-price deal.
US tech-focused lender Silicon Valley Bank and crypto-oriented banks Silvergate and Signature have also failed.
The Federal Reserve has sought to cushion the blow of the banking crisis with a loan program known as the Bank Term Funding Program, or BTFP, which aims to help banks meet their obligations to depositors.
Proponents of bitcoin say that it can serve as a store of value in times of economic crisis and a form of money that people can access without the need for a bank account.
However, it is incredibly volatile and has been known to swing up or down 10% in just a few hours.
Iyer told CNBC, “It seems that the market is placing more importance on macroeconomic factors and the Fed has already started a form of QE, now known as BTFP, but also that the interest rate The pivot can happen sooner rather than later.”
“Against the backdrop of bank failures and bitcoin’s rise over the past month, this provides the perfect context for bitcoin to continue remaining bullish and move higher.”
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