BTC Rose 15% Yesterday Despite Bank Crash. Is It a Safe Asset?
Bitcoin and Ether saw a 10% surge in prices despite the closure of Signature Bank, the last major crypto bank in the US.
Bitcoin rose more than 15% to $24,382.98, while Ether rose 9% to $1,683.20. The jump in cryptocurrencies came after US regulators announced plans to backstop all the depositors in failed Silicon Valley Bank and make additional funding available for other banks.
1. Why do cryptocurrencies take a rare rally yesterday?
Investors were betting that the Fed won't raise interest rates now that authorities have stepped in to limit the fallout from SVB and Signature.
1) Rate expectations shift
US Treasury yields have fallen sharply, which on one hand represents more money flow into bonds, and on the other hand the change in US bonds reflects a shift in market expectations for interest rate hikes.
2) Increased liquidity from Fed
Noelle Acheson, economist and author of the Crypto is Macro Now newsletter, said,
The slower pace of rate hikes and lower terminal rates, combined with a potential injection of liquidity from the Fed, means more liquidity in the market.
Note: Market's hype of liquidity and rate hike expectation might be groundless. We will have to see how the market is going to react after Feb. CPI.
2. Is Bitcoin a safe-haven or a risky asset?
Bitcoin has shown some characteristics of a safe haven asset during certain periods of economic uncertainty, it is not a completely safe asset in the same way that gold or U.S. Treasuries are.
1) safe-haven asset for high net worth individuals
BTC is indeed a safe-haven asset for some high net worth individuals. However, it is not the dollar equivalent (for example, gold is the dollar equivalent), but some kind of "acceptance".
For example, the rich in Russia may not be able to bring precious metals when they move, and stocks and bonds and even fiat currencies are likely to be blocked.
But BTC's cold wallets are very portable.
2) risky asset for retail investors
But retail investors is more price conscious, so bitcoin would be a risky asset.
3. Will Bitcoin continue this rally?
Bitcoin rose over 15% yesterday, and such a large single day gain is extremely rare in recent times.
Bitcoin technical analysts have been looking for an opportunity to break $25,000 since the rally in risky assets started to fade in January.
20,000 and $25,000 are the support and pressure levels for bitcoin right now, respectively.
According to the analysts,
current cost of most investors' positions is concentrated around $23,000, which is a favorable position for BTC.
$Grayscale Bitcoin Trust (BTC)(GBTC)$ $Coinbase Global, Inc.(COIN)$ $Marathon Digital Holdings Inc(MARA)$
How do you view Bitcoin's rally yesterday?
Is it a safe asset choice for you?
At what price will you buy Bitcoin?
Leave your comments to win tiger coins~
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well, basically for me having BTC is equivalent with having an asset with a lot of risk in it. you may win big, but the opposite can happen too where your crypto value can dissipate into the thin air. thus, normally I would never buy a BTC.
however, if the free flow of free money happen again, I may do a speculation buy on BTC to earn some quick profit. but the condition to justify me to buy would be very spesific and situational.
how about you guys @Viv22 @LMSunshine @KYHBKO @Universe宇宙 @Tigress02 @kungpao @wine18 @cindyft @Xian789 @MTok
Let's face it, crypto currency is the future no matter how the authorities try to clamp down on it.
It just a matter of time, just too bad that i missed the opportunity to buy it many years ago.
Let's see if the prices of bitcoin or etherum will come down back to earth if a recession really takes place.
BTC under 20k is a steal. but crypto is risky. only put in what you can lose.
If you cannot trust the government that you can see and you had chosen, why we can trust some whales that we don't even know who?