Bitcoin prices have been rising for some time now with the most valued crypto currency hitting $27,759 on Tuesday at 11.59 IST, CoinMarket Cap data shows.
The price hit $28,567 on Monday, its highest level since mid-June, when it rose 0.9 per cent higher.
There are numerous reasons cited for the spurt in crypto prices. Turmoil in banking stocks is driving some investors to digital assets. Also growing expectations that the central banks would slower the pace of interest rate hikes gave an impetus.
This looks a rational argument since the crypto crash that took place in last year in May-June 2022 was triggered by rate hikes by the US Fed.
The crypto prices had fallen sharply in May-June 2022 amid rising interest rates by the Federal Reserve. The crypto traded near $40,806 on April 19, 2022 and it fell drastically to $28,900 on May 13, and finally to $18,958 on June 19, 2022, a fall of 53 percent in two months.
Collapse of SVB
Lately, the collapse of sixteenth largest bank of America Silicon Valley Bank is also seen as another reason for the jump in bitcoin prices.
On this, Parth Chaturvedi, Crypto Ecosystem Lead at CoinSwitch, said that bitcoin prices spiked 10 percent soon after Silicon Valley Bank’s collapse.
“This positive price action is extremely remarkable. This is seen as a moment where the decoupling of these two asset classes (banks and cryptos) is happening. It shows crypto is still a new asset class. It is still trying to find a place in the investors’ portfolio,” said Chaturvedi.
Bitcoin was created by Satoshi Nakamoto in 2009 following the 2008 recession after the collapse of Lehman Brothers, a US global financial services.
“This reverse correlation (banks and cryptos) is not being validated completely with the spike in BTC on SVB collapse, but we can say that the things are slowly moving in the right direction,” said Mr Chaturvedi.
Another thing that is perhaps responsible for the recent spurt in BTC is that Changpeng Zhao, CEO of world’s largest crypto exchange Binance announced that the exchange would convert nearly $1 billion worth of BUSD Stablecoin into Bitcoin, Ether and BNB.
This is also seen as one of the key reasons for spike in bitcoin lately.
