Bitcoin witnesses best week in five years

At the time of writing, the price of one bitcoin is $26495. Bitcoin is on track for one of its largest weekly rises in recent memory, supported by bets on future interest rate reductions as the token weathers the financial sector’s turbulence.

Since Monday, the biggest digital asset has increased by roughly 25%. In the previous five years, it increased by at least that amount only 10 times every week. Smaller coins like Dogecoin and Ether are also rising.

Expectations of an end to the monetary tightening that decimated cryptocurrencies in 2022 are being strengthened by the failure of three regional US bankers and tremors at Credit Suisse Group AG. The unrest is also giving new life to the assertions made by Bitcoin’s most fervent advocates that the token can replace fiat money.

The current turmoil in the US banking industry, which may result in the Federal Reserve adopting a more accommodative position, highlights Bitcoin’s twin function as a legitimate risk asset and a hedge against conventional finance.

As of 7:51 a.m. in New York, bitcoin was trading at roughly $26,880, up as high as 8.8% on Friday. Ether, which came in second, climbed about 6%. When efforts to contain the upheaval in the banking sector gained traction, stocks rose earlier in Asia as well.

The Fed’s benchmark interest rate is expected to rise in May to combat high inflation, then be reduced by around 70 basis points this year to encourage economic growth.

Regardless of whether macro traders comprehend or believe in the longer-term Bitcoin investment, any evidence of interest-rate decreases should push money to riskier assets, which is likely to be enough to attract more institutional funds into the crypto market.

A harsh regulatory crackdown in the US has been imposed on the digital asset industry as a result of the failure of the FTX cryptocurrency exchange. The effects of a brief de-pegging in USD Coin, or USDC, over the weekend are also becoming apparent in the cryptocurrency markets. The second-largest stablecoin, a kind of token that is meant to have a fixed $1 value, is USDC.

The US Securities & Exchange Commission is reiterating its claim that the majority of digital assets are securities, which calls for better investor protection and might make tokens more difficult to sell. Regulators in the US, however, generally concur that Bitcoin is not a security.

The value of Bitcoin now makes up 43% of the whole cryptocurrency market, which is the biggest share since June 2022. With a rise of over 63% so far this year, it is almost at its highest point since June 2022. But, it is still far below the record low of roughly $69,000 set in November 2021.