Crypto advocates say the recent investors’ shift to the industry following the latest banking troubles could help boost Bitcoin’s “safe haven” status.
The collapse of signature Bank and Silicon Valley Bank, along with the sale of Credit Suisse Bank to its competitor UBS last Sunday, helped the biggest crypto asset by market capitalization reach $28,000 over the past weekend for the first since last June.
What’s Fueling Surge in BTC Price?
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According to data from CoinMarketCap, Bitcoin is up 14% in the past seven days and rose by 1.8% in the past day to trade at $28,346 as of this writing.
The rally is partly fueled by expectations that the US central bank will go slow on increasing interest rates due to the current banking crisis. This has caused the investor risk appetite to increase, benefiting risk-on assets such as cryptocurrencies.
However, some crypto analysts say the recent Bitcoin surge is driven by investors who are hedging against risks associated with the traditional finance (TradFi) system. Founder of Custodia Bank Caitlin Long says the latest instability in TradFi is causing traditional investors to look at BTC for the first time.
Is it BTC’s Time to Shine?
The banking crisis has raised hopes that BTC could serve as a safe haven asset for people to protect their funds from troubled markets.
Yesterday, Ark Invest founder Cathie Wood and the fund’s crypto lead, Yassine Elmandrja, said in a newsletter that cryptocurrencies have the potential to provide an alternative to traditional banking. Elmandrja added that Bitcoin’s price increase indicates that lax regulatory oversight does not affect the transparent, auditable, decentralized crypto ecosystem.
Meanwhile, CoinShares analyst James Butterfill says Bitcoin has not stopped being a safe haven asset despite being sensitive to the interest rate. However, with the Fed seemingly backing off from aggressive interest rate increases, Butterfill claims Bitcoin will continue to perform just gold.
Investors are now closely watching the correlation between gold and Bitcoin to determine if BTC’s safe haven status holds any water.
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Gold has risen by 8% since the start of this month due to safe-haven demand, while Bitcoin has increased by 34% since March 13.