Bitcoin has made a comeback, regaining almost all of its losses from the previous year after it climbed past $27,000 for the second time this week. In recent days, most cryptocurrencies have broken out of upward consolidation, as the market has managed to escape the grip of bears. As of writing, Bitcoin is currently trading at $27,519, which is 36% higher than the previous week, putting it halfway towards its $28K target - its highest level in nine months.
The price of Bitcoin has increased by 22% in the last two weeks and 13% in the last 30 days, contributing to the worldwide crypto market capitalization rising by over 5.4%. While some experts speculate that this is a short-term rebound, a more significant price move is expected soon. The recent injection of around $300 billion into the economy, as indicated by the Federal Reserve's overnight data from its balance sheet in response to the banking crisis, has acted as a catalyst for this upward trend.
Amidst the banking crisis last week, investors have praised the resilience of cryptocurrency prices. While the spotlight was on First Republic Bank, with major US financial institutions depositing $30 billion to help, Bitcoin's narrative is reportedly changing due to inflation and Federal Reserve rate hikes. A rate hike can increase borrowing costs, potentially reducing demand for cryptocurrencies as investors look for safer investments. Additionally, a rate hike may strengthen the US dollar, making cryptocurrencies more expensive for foreign investors. Alternatively, some investors may see cryptocurrencies as an alternative investment choice as interest rates rise in traditional financial markets.
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