Amidst the commotion that has littered the traditional finance sector, digital currencies such as Bitcoin have emerged victorious. This year, the price of Bitcoin rose by more than 50% after an awful 2022 when the cryptocurrency sector was hugely affected by the collapse of crypto exchanger FTX, risk aversion, and an increase in interest rates.
Josh Gilbert, the market analyst for eToro, has stated that Bitcoin is rated as one of the best-performing assets this year, with a 55 percent gain. Despite the chaos over the market after the collapse of Signature Bank, Silvergate, and Silicon Valley Bank, Bitcoin went against the odds. Its value by this weekend is $US27,000 from $US20,101 on Friday before the failures of financial institutions.
Gilbert said that when investors are uncomfortable with centralized banking systems, they will shift to decentralized assets like Ethereum or Bitcoin. As banks encountered the challenges that befell them, Bitcoin was busy delivering to its customers. It allowed investors to access their capital whenever they wanted and processed transactions within a fraction of a second.
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Stephane Ouellette, the CEO of Canadian trading platform FRNT Financial, narrated to Bloomberg that current bank runs due to an increase in interest rates after a period of ultra-low interest rates is an ideal scenario for the use of Bitcoin.
However, the legal tender is exchanging at less than half of what it was in the last 12 months. It is below $US64,000 as it was in 2021. Gilbert further stated that a positive perspective on interest rates fueled increasing investors craving for crypto after the recent financial crisis.
Investors are growing interested in Bitcoin due to the decreasing inflation expectations. That is considered a plus for high-risk assets such as Bitcoin. The fight against inflation is not over, but things are on the right track. It is an opportunity for investors to invest in Bitcoin, as last year was awful for the asset.
The UBS global and US equity strategy head Keith Parker says the 50 basis point fall in the 10-year US Treasury yield is experiencing a positive impact on yield-sensitive assets like gold and crypto. Gold sensitive to yield has been an atop-performing asset for over a week.
The investors plan to develop a $100 million Bitcoin fund that will purposely be used to acquire distressed assets in the crypto market. The fund targets investing in Bitcoin miners’ debt, trading at lower prices because of scandals like FTX, which have negatively affected the market. One of the fund’s managing partners, James Lavish, revealed that they plan to buy such debt being traded at a lower price.