Dear clients,
At the beginning of the year, Bitcoin experienced a harsh mid-winter, a post-2022 decline characterized by falling cryptocurrency prices, bankruptcies and corporate scandals.
Within three months, Bitcoin regained its gloss. With gains of more than 70%, it outperformed other majors this year and traded at nearly its highest level in nine months on Wednesday.
Markets expect the central bank’s appreciation of credit to be nearing its peak, and this scenario is set to support risk assets. Other factors are also at play, from turmoil in the banking sector to ongoing hopes—still unfulfilled—that bitcoin could become mainstream as a form of payment.
Bitcoin closed its best week in four years on Sunday and gained 45% in just 12 days.
As the collapse of U.S. lenders Silicon Valley Bank and Signature Bank helped spark a takeover of 167-year-old Credit Suisse by rival UBS, claims that Bitcoin is a risk-tolerant asset in traditional finance are gaining momentum.
According to analysts, it is rather short-sighted to say that Bitcoin will succeed because the bank failed. But trust is almost a decisive factor, and trust in the banking system has been undermined.
In the past, wild price fluctuations in Bitcoin have also been closely linked to global monetary policy changes.
As stimulus measures flooded the global financial system during the COVID-19 pandemic, stay-at-home investors fueled a six-fold rally in bitcoin between September 2020 and April 2021. In 2022, Bitcoin fell over 65% as higher rates caused the main crypto token to drop, which hastened the shutdown of major hedge funds and crypto lenders. He was further bruised by regulatory headaches and the sharp drop in the FTX exchange.
The cataclysmic year was another reminder of Bitcoin’s vulnerability to external shocks, despite claims by proponents that it is a safe-haven asset in times of political and economic stress.
