Cryptocurrencies surged Wednesday as investor concerns about the U.S. banking sector began to rise again, with First Republic Bank battling to survive.
Bitcoin It rose 8% to $29,828.25, according to Coin Metrics.it helped lift etherrose 6% to $1,957.02. Both crypto assets are still below the critical levels of $30,000 and $2,000 each traded two weeks ago for the first time since last year.
Bitcoin was trading flat for several days with volatility returning to early March lows before the banking crisis began and became one of the biggest cryptocurrency rally catalysts of the year. Matt Hogan, chief investment officer at Bitwise Asset Management, said that First Republic troubles may be driving cryptocurrency price movements once again.
“Cryptocurrencies rose during the banking crisis and it looks like the banking crisis is not over yet,” Hogan said.
First Republic shares fell nearly 50% to a record low on Tuesday after reporting a significant drop in deposits in the first quarter as customers withdrew funds following the Silicon Valley Bank collapse. bottom. CNBC’s David Faber reported that the next few days will be critical for the company as other banks and federal officials try to finalize rescue plans.
Bitcoin (BTC) this year
Bitcoin surged 22% in March as the crisis among U.S. regional banks opened investors’ eyes to its potential use as a hedge against uncertainty and as an alternative banking system.
“Bitcoin remains the ultimate lifeboat from the current banking system and a major risk-on asset,” said James Lavish, managing partner of the Bitcoin Opportunity Fund. Bitcoin represents a safe haven against uncertain bank deposits.”
According to crypto data provider Kaiko, the 30-day rolling correlation between Bitcoin and gold has been on the rise since March and now stands at 57%, the highest level in almost two years.
of US dollar index Bitcoin has fallen at its worst day-to-day pace since April 12, when it traded at a high of the year.
Fed Concerns Coming Soon
While the declines over the past week did not negate the uptrend since the beginning of the year, uncertainty still looms over cryptocurrencies.
Traders are watching the Fed’s latest decision on whether and when to start cutting rates to combat high inflation and any direction. The central bank’s next policy meeting is next week, and the latest figures on its favorable inflation gauge, private consumption spending, are due out this weekend.
Yuya Hasegawa, a cryptocurrency market analyst at Japanese cryptocurrency exchange Bitbank, said: “The cryptocurrency market learned last month that the banking crisis will favor bitcoin prices, but it needs to be approached from multiple angles. There is,” he said. “The Federal Reserve (Fed) futures market is pricing in a rate cut starting later this year, and it could be a source of disappointment if the Fed withholds comment or even denies the possibility of a rate cut this year. has potential,” he said.
— CNBC’s Gina Francolla contributed to the report
