Bitcoin Rallies Amid Banking Crisis

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Facts

  • As traditional stocks and bonds are in freefall amid the ongoing banking crisis, Bitcoin has surged in value this month — rising 21% compared to the S&P’s 1.4% loss.1
  • Cryptocurrency prices rose slightly on Tuesday as investors braced for the conclusion of the Federal Reserve’s two-day policy meeting on Wednesday. After slipping below the $28K level Monday, Bitcoin rose 1.3% to $28,240 while Ether advanced 2.4% to $1,799.2
  • Bitcoin has reached its highest value in nine months, and some investors view cryptocurrency as a safe haven following the collapses of three major US banks and UBS’ takeover of Credit Suisse.3
  • Bitcoin’s resurgence is a welcomed sight for the crypto market — especially leading exchange Coinbase — which reported a $2.6B net loss in 2022. Coinbase’s stock has increased by 56% in less than two weeks.4
  • Despite crypto’s rally, data from Coinglass shows traders liquidated $300M worth of crypto positions on Monday, with most of that total — $178.5 million — short positions.1
  • Still, sector experts see the current run-up in the Bitcoin prices as a sign of the reemergence of the debate on the importance of DeFi (Decentralized finance) and digital assets in the wake of the banking collapses.5

Sources: 1 Reuters, 2 CNBC, 3 Yahoo Finance, 4Fortune Crypto, and 5 Mint.

Narratives

  • Narrative A, as provided by Coin Telegraph. As the global banking sector descends into chaos, cryptocurrencies, especially Bitcoin, have acted as a safe haven for investors. Mainstream media outlets and traditional finance entities have tried to scapegoat crypto as the root of economic problems, but policy mistakes by the Fed and legislators are the real issues. Cryptocurrency is the solution to many problems, not the cause.
  • Narrative B, as provided by The Motley Fool. Investors are looking for reassurance as several major banks are collapsing, but cryptocurrency is not a safe place to put your money. Cryptocurrency is still immensely volatile, and platforms fail regularly. Also, cryptocurrency does not have the same protections as traditional banking and stocks, making it even riskier. Overall, cryptocurrency is not a wise investment amid financial uncertainty.