Bitcoin extended its gains, after another big jump last Tuesday, as its value crossed $30,000 for the first time since June.
Bitcoin remains the wild success story of the cryptocurrency market for the current year, having risen more than 80% since the beginning of the year, after declining significantly over the past year, outperforming many other assets.
The “Nasdaq 100 Index”, an index of the largest shares of technology companies, also gained nearly 20% during that period, which is a strong performance, but it is far from the performance of “Bitcoin”, which returned strongly.
The New York Times reported that the recent rise in the price of Bitcoin appears to be related in part to the monetary policy of the US Federal Reserve, which included nine interest rate hikes over the past year.
Crypto-asset prices sank a year ago when the Reserve Board started raising interest rates, but investors are now betting that the Fed will soon stop its price increases, although some officials in the Council were suggesting the opposite, which led to a significant recovery.
Bitcoin’s biggest gains also coincided with turmoil in the US banking sector, where the cryptocurrency is up more than 45% since the collapse of the Silicon Valley bank last month.
Advocates of the cryptocurrency industry have pointed out that the recent rise in the price of “Bitcoin” is a sign that investors are shifting some of their money into digital currencies, although there is little evidence of this happening.
As of last week, Microstate owned 140,000 bitcoins, which is worth about $4.2 billion at current prices, surpassing the company’s market value of $3.6 billion.
Bitcoin supporters took advantage of the price hike to argue that the banking crisis was prompting investors to convert traditional currencies into digital currencies.
One cryptocurrency executive hailed the bank failures, calling them “the end of the dollar and the dawn of hypercoin.”
The company that markets Bitcoin to investors has begun to include references to banks in its promotional materials.
But despite the hype, there is little evidence that the recent banking meltdown has generated widespread support for bitcoin as a financial alternative.
Instead, the rally in Bitcoin’s price has been driven by a set of financial trends that have little to do with the technology’s philosophical underpinnings, analysts said.
Reasons for the increase include growing optimism that the Federal Reserve may pause interest rate increases, as well as growing concerns about the safety of so-called stablecoins, a type of cryptocurrency intended to hold the price of one dollar.