Following a negative week for the world’s largest cryptocurrency by market capitalization, Bitcoin is finally back on the green.
The asset is currently boasting an 8.9% increase over the past 24 hours, going from $27,312 to $29,847. The daily trading volume increased by nearly $10 billion over the past couple of hours, currently at $24 billion at this time of writing.
Furthermore, this most recent increase comes at a crucial time for the cryptocurrency. After reaching the highest point of the year at $30,967 on April 14, the currency went through a significant retraction losing over 11% of value in the following days.
The growing regulation concerns, boosted by Gensler’s hearing in the U.S. Congress caused selling pressure to take over during that time period. In addition, recent reports regarding economic uncertainty in leading economies like the U.K. and the U.S. further corroborated the narrative that the crypto market would remain mostly inactive until the next FOMC meeting, happening on March 2.
Banking Crisis Unfolding
However, a recent development regarding the ongoing crisis in the banking sector caused the risky assets markets to gain value.
Today, on March 26, First Republic Bank saw its shares crash by over 13%. This market movement comes just two days after the regional bank declared that it had lost over 40% of its deposits in 2023’s first quarter.
This development puts pressure on the American Government to decide how far it is willing to go in order to save the collapsing banking system.
While this occurrence puts even more weight on the Fed to deal with inflation and could result in higher interest rates — investors are now once again beginning to see crypto as a safe haven against economic turmoil.
Since the first day of the Silicon Valley Bank crash, bitcoin reached above $22,000 — and much of the recent surge to $31,5000 can be attributed to the distrust in the financial industry.
It remains to be seen how the market will react to the growing inflation in the future if it indeed happens.
The next couple of days are promising a lot of activity in the digital currency industry. On Friday, we will get updates on the U.S. GDP and inflation by PCE.
Next week, the Federal Reserve will hold a meeting on Tuesday and Wednesday, and it is anticipated that they will implement another 0.25-point increase in interest rates. Also, the Federal Reserve will provide signals about their future plans for adjusting rates.