The World’s largest cryptocurrency by market capitalization has had an eventful month.
Overall, the currency is heading to this month’s last days on a modest 4% increase when compared to April 1st. Bitcoin had its best performance in the second week of the month when the asset nearly broke through the $31,000 resistance for the first time in a year.
This positive movement can be attributed to cryptocurrencies gaining traction during the U.S. banking sector crisis. On each occasion that a relevant bank announced a near-collapse — the entire digital market reacted extremely favorably.
In addition, this favoritism against the standard financial sector puts weight on the narrative that BTC is becoming an “hedge against inflation”. Meaning that the currency becomes an interesting investment during hardships and economic uncertainties.
As of right now, $BTC is currently trading at $29,300, rehearsing another go at the $30,000 zone. The currency gained a lot of traction in this last week — with the 24-hour trading volume spiking to $35 billion on the 26th, indicating that buying pressure overcame the opposition.
Outside Pressure Affected Bitcoin
However, following that surge on April 14, the asset went through a severe detraction — losing over 8% of value in less than seven days.
These less-than-stellar days can be attributed to several factors. Firstly, the entire market was negatively influenced by the appearance of Gary Gensler at a U.S. Congress hearing.
At the time, the SEC Chairperson spoke about the importance of developing new regulations to provide a safer market to the common investor. Moreover, Gensler also went after “staking” cryptos, claiming that these assets should be classified as securities.
In addition to that, the market also reacted negatively to reports that consumer prices are rising in the U.K.
This indicated that inflation is not under control at the land of the king, and more interest raises can be followed shortly.
FOMC Meeting on March 2
The Federal Reserve will hold another FOMC meeting on March 2 to analyze multiple inflation and pricing data in order to decide the country’s next interest rate.
At first sight, everything seemed to lead to a favorable conclusion for risky assets. The most recent consumer price index data revealed a slower growth in inflation, as well as a drop in food expenses.
However, the market has become increasingly concerned about the potential for rising interest rates as the economy recovers and inflation remains stubbornly high.
Many investors fear that higher interest rates could slow economic growth and reduce the demand for risky assets like stocks and cryptocurrencies, including bitcoin.
As a result, the outcome of the FOMC meeting could have a significant impact on the price of bitcoin and other assets in the coming weeks and months.