Bitcoin has continued its bullish streak, surpassing the $26,000 mark as market sentiment turns risk-on. The leading cryptocurrency has seen a surge in demand from investors seeking high-risk, high-reward assets amid a flurry of economic uncertainty caused by the COVID-19 pandemic. As a result, investors are turning to cryptocurrencies as a safe haven, further propelling Bitcoin’s market dominance. With positive market sentiment and increasing mainstream adoption, Bitcoin’s rally could continue well into 2021.
Bitcoin Experiences Impressive Gains Amid Rising Cryptocurrency Market
Bitcoin, the world’s most recognized cryptocurrency, has continued its bull run by posting impressive gains of over 6% in the past 24 hours. According to data from CoinGecko, Bitcoin reached a high of $26,350 on Friday morning. This price surge has come alongside a wider uplift in the cryptocurrency market, which saw the total market cap of all cryptocurrencies rise over 4% in the past day, to $1.17 trillion.
This bullish trend follows a rise in US and Asian stock markets after major lenders such as J.P. Morgan, Goldman Sachs and others agreed to inject $30 billion to save US-based First Republic Bank from insolvency, promoting risk-on sentiments. The dollar’s yield is declining as the Federal Reserve potentially moves away from quantitative tightening, prompting renewed interest in risk-on assets like stocks and crypto from investors.
The US inflation data for February also came along the lines of market expectations, showing signs of slowing down. The CME FedWatch tool shows that traders have put an 84.1% chance that the Fed will raise rates by 25 bps, while the rest predict that the Fed could also maintain the current rate. With the dollar’s yield declining, Bitcoin remains an attractive alternative for investors.
On Thursday, the European Central Bank also raised its benchmark interest rate by 50 base points (bps), putting further pressure on the dollar index (DXY) with a relatively higher-yielding euro than the dollar. These developments have led to a renewed interest in Bitcoin and other cryptocurrencies, with many investors flocking to alternative investment options.
According to Nathan Batchelor, managing partner at Biyond Trader, Bitcoin is reacting to the increase in the Fed’s balance sheet and the form of “quantitative easing (QE) light” taken in response to Silicon Valley Bank. He added that technically, Bitcoin is wildly bullish above $25,000 and looks to be targeting $28,000 at a minimum.
Another factor influencing Bitcoin’s price is the risk of a global banking crisis. Banks worldwide in Europe and the US are facing a potential insolvency crisis. While state governments and larger institutions like J.P. Morgan have backstopped the fallout for now, uncertainty around a banking failure is helping to build positive sentiment around decentralized alternatives such as Bitcoin.
In conclusion, Bitcoin’s impressive gains in the past 24 hours have come alongside a wider uplift in the cryptocurrency market, as investors continue to flock to alternative investment options amid rising global economic uncertainties. As Bitcoin continues to gain traction, analysts predict that its value will continue to rise, making it an attractive investment option for investors seeking high returns. Stay on top of crypto news with daily updates in your inbox.