Bitcoin shows resilience, recovers above $28,000
So much for fears about federal monetary policy, increased regulatory activity and banking turmoil.
A day after bitcoin plummeted after a US Federal Reserve rate hike that disappointed some observers, investors sent the largest cryptocurrency by market cap back above $28,000, roughly where it was earlier in the week when hopes of an end to the US Federal Reserve Central bank big was bank hawkishness.
BTC recently traded at around $28,393, up 3.8% over the past 24 hours. Even that level earlier in the day represented a retreat from breezy air closer to $29,000. Bitcoin is up about 22% this month and more than 65% since Jan. 1.
“The crypto ecosystem is under attack. You see all this regulation through enforcement attempts, but also the banking crisis that has spread to banks that serve the crypto community,” Benoit Bosc, global product lead at crypto trading firm GSR Markets, told CoinDesk TV. “As a result, you have this flight to quality to the majors. Bitcoin has benefited the most and has recovered significantly since these events began. Such was the case with yesterday’s action by the Fed, refusing to really consider any cuts but also refusing to break the hiking cycle.”
Bosc said markets balked at comments by Fed Chair Jerome Powell and US Treasury Secretary Janet Yellen on Wednesday, who reiterated concerns about inflation. Powell could not guarantee the bank would not hike interest rates again, which some Fed critics have blamed for recent banking disasters, and Yellen would not promise to protect all bank deposits in the event of a widespread sector collapse without congressional approval . As a result, risk assets of almost every stripe crashed, sweeping cryptos up.
“The first reaction is one that correlates with all risky assets; it’s a little leg down,” Bosc said. “But after that you’ll, you know, you’ve got this store of value, the digital gold attribute of bitcoin, meaning you’ve still got inflation. They fight it, but it still exists.
He added: “Bitcoin has a limited supply, so this is a better alternative. They also have problems with stablecoins. So Bitcoin suddenly seems more stable and secure than it is at the moment.”
Ether, the second largest cryptocurrency in market value, recently changed hands at $1,810, up 4.6% from the same time Wednesday. Other major cryptos were mostly in the green, making up ground lost the day before. Stablecoin XRP and TRX, the token of blockchain-based platform Tron Network, recently surged 5.7% and 9.4%, respectively. TRX fell the previous day after the US Securities and Exchange (SEC) charged its founder with selling and dumping unregistered securities, fraud and market manipulation. Litecoin continued its recent momentum, up 7.8%. The CoinDesk Market Index, a measure of overall market performance, rose 4.2%.
The industry continued to be rocked by misdeeds as New York prosecutors charged Terraform Labs founder Do Kwon with fraud hours after he was arrested by police in Montenegro. On Wednesday, the SEC warned Coinbase that the agency is pursuing an enforcement action against the exchange.
In an email to CoinDesk, Ilya Volkov, CEO of YouHodler, a Switzerland-based international fintech platform offering Web3 crypto and fiat services, noted Bitcoin’s resilience following the Fed decision. “Crypto is an integral part of global financial markets,” Volkov said.
GSR’s Bosc has been optimistic about the future of Crypto. “They just shrugged off Do Kwon and this market this morning and have continued to climb and stabilize at levels that seemed very high,” he said. “A few months ago nobody would have thought that we would be there. Those events a few years ago would have decimated the market. It’s very interesting to see how strong the market is.
He added: “I don’t see it as a risk to the rally. But it gives me a lot of confidence in this ecosystem, this community and the chance to be embraced much quicker than people expected.”
Institutional investors are holding back
The number of Bitcoin addresses holding more than 1,000 BTC has been in a sustained, steady 12% decline since March 2022.
The metric, which offers insight into institutional investors’ appetites, suggests a reluctance by this important group to add BTC to their coffers at this time.
Larger ether investors have shown slightly different behavior. Although price movements for BTC and ETH have traditionally been closely related, their number-of-whale-specific trajectories have gone in opposite directions. The number of ETH whales has increased by 5% over the same period.
The US Securities and Exchange Commission has issued a Wells Notice to crypto exchange Coinbase that may result in the SEC suing Coinbase or taking other enforcement action against Coinbase. This came as the SEC sued TRON founder Justin Sun over allegations that his projects had sold and airdropped unregistered securities and committed fraud and market manipulation. Crypto Council for Innovation Director of Government Affairs Brett Quick and Storm Partners Managing Partner Sheraz Ahmed joined the first mover.