Bitcoin (BTC) is on track to record its best quarter in two years, outperforming several other assets including Ethereum (ETH), gold, and the Nasdaq index, as per an analysis by Coindesk on Wednesday (March 29th).
At the start of this year, $BTC traded below $17,000, reaching its lowest price since the 2021 boom, and many experts believed that it might even drop further to $12,000.
However, the world’s largest crypto by market capitalization took a different route in 2023. Since January, Bitcoin gained over 70% in value and is now being traded at $28,450, as per the data from CoinMarketCap.
BTC appears to be on track to recover the losses it faced in 2022 when it lost three-quarters of its ATH price from November 2021, when it reached over $68,000.
Fed’s Lighter Interest Raises Helped BTC
Throughout 2022, the cryptocurrency market suffered on the hands of the United States Federal Reserve.
In order to try and tame inflation — which at the time was on its way up due to the post-pandemic recession — The Fed started raising American interest rates by a huge margin. Around August, the government came to the point of announcing a 0.75% interest raise alone, which caused the U.S. to reach a two-decade-long high on interests.
With higher interest rates, riskier assets like bitcoin and stock tend to lose value. Many attribute that phenomenon to the fact that investors are not disincentivized from taking loans.
However, around the end of the year, the Fed announced a “slow down” of raises.
Over the past couple of months, the U.S. continued to raise rates, but at a much slower pace — the last interest raise was of “only” 0.25%.
The slowdown of raises ultimately aided digital assets in recovering some of its losses in 2022. Bitcoin gained 70% of value since then, Ethereum 60%, and Solana gained over 130%.
