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Bitcoin Tops $26,000 as Sentiment Stays Upbeat After US Steps - BLOOMBERG

MARCH 14, 2023

(Bloomberg) -- Bitcoin climbed to $26,000 for the first time since June on growing optimism that the digital-asset sector will weather the recent turmoil in the US financial system.

The largest cryptocurrency gained for a fourth day, increase as much as 7.9% to $26,142. It last traded above $26,000 in June. It has rallied about 29% since Silicon Valley Bank failed on March 10. Data from derivatives trading data site Coinglass shows that more than $280 million in short crypto positions were liquidated in the past 24 hours.

“While dark clouds sit over Silicon Valley, Bitcoin is booming,” Fiona Cincotta, senior financial markets analyst at City Index, said by email. “Cryptocurrency is extending its impressive rally, as traditional banks struggle to maintain the trust of customers. Bitcoin has often been considered an alternative to the traditional banking system, and as uncertainty in that sector builds, Bitcoin sees an increase in safe-haven flows.”       

The virtual digital tokens market stabilized after a jittery week that saw three crypto-friendly banks in the US collapse as local regulators took steps to shore up the nation’s banking sector, including pledging to fully protect depositors. The measures also helped to bring the world’s second-largest stablecoin, USDC, back to its intended $1 peg, which cracked over the weekend following the shutdown of Silicon Valley Bank.

The government bailout of Silicon Valley Bank depositors was seen as a boon by many investors, and helped push Bitcoin past its 200-day moving average of $19,740, said Hayden Hughes, co-founder of social-trading platform Alpha Impact. Sustained moves above the 200-DMA are usually early indicators of a bull market, he said.

“If we stay at 25k, the next stops would be 28 and 30k,” Hughes said.

An increase in underlying US consumer prices in February by the most in five months helped to support crypto prices. Bitcoin has often been touted as a hedge against inflation. 

The 0.5% rise in the US consumer price index, excluding food and energy, leaves the Federal Reserve in a tough position as it tries to thwart still-rapid inflation without adding to the turmoil in the banking sector.   

--With assistance from Muyao Shen.


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