The price of Bitcoin (^BTCUSD) today rose above $30,000 for the first time in 10 months. After sinking to a 2-year low in November, Bitcoin has rallied +82% so far this year, handily beating this year’s +7% rally in the S&P 500 Stock Index ($SPX) (SPY) and the +19% gain in the Nasdaq 100 Stock Index ($IUXX) (QQQ). Nevertheless, Bitcoin is still more than 50% below its all-time high from November 2021.
Several factors have supported the price of Bitcoin this year. First, Bitcoin is climbing on speculation that easing price pressures and a slowdown in the economy will prompt the Federal Reserve to end its rake-hike campaign. Also, this year's banking sector turmoil has caused some investors to flock to Bitcoin as a shelter from traditional finance.
If Bitcoin can maintain gains above $30,000, that may attract additional buying. Quantum Economics said, “30K is very significant for both technical and fundamental reasons. The resistance has been building up for three weeks straight and has now finally broken.” Bitcoin is attempting to recover the losses made last year after the collapse of the TerraUSD stablecoin sparked a selloff in cryptocurrency prices that led to the demise of the FTX exchange.
The crypto industry still faces immense scrutiny that has caused headwinds for the industry. For example, crypto exchange Coinbase Global (COIN) said it had received a notice from the Securities and Exchange Commission (SEC) declaring its intention to bring an enforcement action. Also, the U.S. Commodity Futures Trading Commission (CFTC) has sued Binance founder Changpeng Zhao and his crypto exchange for alleged violations of derivatives regulations.
Despite regulatory setbacks, Bitcoin’s rally has gained strength over the past month following the collapse of three U.S. banks, boosting the narrative that Bitcoin offers an attractive alternative to traditional finance. A decline in liquidity has also aided the recovery in Bitcoin prices after market makers lost access to U.S. banking functions provided by Silvergate Capital Corp and Signature Bank. FRNT Financial said, “Order books are thin, and trading activity is depressed. Under these circumstances, it is possible that we see price action that is difficult to pin to any one reason.”
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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
