Bitcoin thrives in chaos, breaks above $28,000 for first time since June
Ethereum up about 17% since the start of last week, Solana and Cardano advancing too
Turmoil in the banking sector, hotter-than expected inflation data, and renewed hopes for a dovish Federal Reserve has Bitcoin reaching levels not seen in about nine months.
The largest digital asset topped $28,000 for the first time since June 2022, trading for as much as $28,258 on Sunday. Since the start of the year, Bitcoin's price has risen almost 70%. Other digital assets rallied as well "- with Ethereum up about 17% since the start of last week and so-called altcoins like Solana and Cardano advancing, too.
Traders waded high levels of uncertainty last week in markets. US two-year yields fluctuated wildly, and the Cboe Volatility Index, the so-called fear gauge also known as the VIX, spiked above 30. But Bitcoin kept steadfast "- and straight up.
"Bitcoin is correlated with liquidity conditions and real rates. Real rates have declined, liquidity conditions have expanded, and it looks as if we're entering a new regime," said Ilan Solot, co-head of digital assets at Marex.
Broader markets fluctuated in the past week after a handful of US lenders failed, and fresh concerns arose around Credit Suisse Group AG before UBS Group AG agreed to buy its fellow Swiss bank on Sunday. In the fallout, some investors have called on the Fed to pause interest rate hikes. But midweek data showed that core CPI advanced more than expected, a reminder that the fight against inflation is far from done. It's unclear how the central bank will respond to the conflicting signals at this week's Fed meeting.
That uncertainty troubled many corners of the financial world but emboldened Bitcoin bulls who see the digital asset as a hedge against inflation, despite last year's evidence to the contrary. In 2022, a series of bankruptcies and scandals pushed the price of Bitcoin down more than 60%.
The token also rose in spite of internal strife in the digital asset space. USD Coin briefly lost its peg with the dollar this month, and the US Securities & Exchange Commission is doubling down on the belief that most digital assets qualify as securities.
The S&P 500 dropped 1.1% on Friday. If Bitcoin were still trading like it did for much of 2022, the token would have slumped alongside US stocks. But this month, the correlation between the digital asset and the S&P 500 has dissipated.
"In this instance, we are definitely seeing people look to Bitcoin," said David Martin, head of institutional coverage at digital asset prime brokerage FalconX.