Bitcoin rose substantially on Wednesday as investors shrugged off early concerns over U.S. regulators’ crackdowns on industry titans and proved prepared to take some risk.
According to CoinGecko data, the world’s largest cryptocurrency has risen 5% in the last 24 hours to as high as $28,474. Bitcoin has reclaimed the $28,000 mark after falling below it on Monday as a result of the Commodities Futures Trading Commission’s (CFTC) lawsuit against Binance.
After a terrible 2022 that saw the collapse of key crypto exchanges and a dramatic drop in values, Bitcoin has been slowly rebounding this year. Investors have found solace in the prospect of a U.S. Federal Reserve interest rate hike, which has placed pressure on risk assets such as equities.
The cause for the increase on Wednesday was not immediately apparent. Yet, it comes amid a wide increase in US stock prices. Bitcoin has been known to track equities market swings, with investors seeing it as a standard risk asset.
Wednesday morning, Nasdaq futures were up 100 points, or 0.9%.
The CFTC has just filed a lawsuit against Binance and its co-founder Changpeng Zhao for allegedly violating trading regulations by recruiting clients in the United States without authorisation.
The Securities and Exchange Commission has also threatened legal action against Coinbase for potential securities regulation breaches.
“Broadly we are looking quite bullish here with Bitcoin reclaiming $28K and looking to target $30K next,” Vijay Ayyar, head of international at crypto exchange Luno, told CNBC via email Wednesday.
“In general, when price action starts to absorb negative news this quickly, it indicates that the market is bullish and trending upward. The CFTC case against Binance, while quite important, doesn’t seem to have affected the market that much.”
Bitcoin had previously benefited from problems in the global financial system. Credit Suisse was recently rescued by major rival UBS in a government-backed, low-cost arrangement.
Bitcoin had previously benefited from problems in the global financial system. Credit Suisse was recently rescued by major rival UBS in a government-backed, low-cost arrangement.
Silicon Valley Bank in the United States, as well as the crypto-focused banks Silvergate and Signature, have all collapsed.
The Federal Reserve has attempted to soften the shock of the financial crisis by launching the Bank Term Financing Program, or BTFP, which tries to assist banks in meeting their responsibilities to depositors.
Bitcoin supporters argue that it may be used as a store of value in times of economic turmoil and as a form of money that anyone can access without the need for a bank account.
“The market seems to be placing greater importance on macroeconomic factors and that the Fed has already begun a form of QE, now known as BTFP, but also that the interest rate pivot might happen sooner than later,” Ayyar told CNBC.
“Against the bank failure backdrop over the past month or so and Bitcoin’s rise, this provides the perfect context for Bitcoin to continue remaining bullish and move higher.”
