Why Crypto Keeps Climbing Despite the Banking Crisis

Investor Highlights

• Bitcoin and Ether have maintained positive performance despite regulatory pressures and the current banking crisis.
• BTC has increased by 20% in the past month, while ETH has gained approximately 10%.
• BTC market cap has reached ~$530B, making it the 11th highest asset globally by market capitalization.
• Bitcoin is increasingly seen as a safeguard against banking vulnerability and the depreciation of the US dollar.

Despite mounting regulatory pressures, Bitcoin and Ether have managed to maintain their positive performance throughout the current banking crisis. 

In the past month, Bitcoin has increased by about 20%, while Ether has gained around 10%. 

Bitcoin’s market cap has reached ~$530B, making it the 11th highest asset globally by market capitalization, tucked right between Tesla and Facebook.

How has Bitcoin been bolstered?

The are a handful of reasons why Bitcoin, in particular, has maintained its resilience.

Institutional Appeal

Cathie Wood of Ark Investment Management told Bloomberg that Bitcoin's price behavior during the crisis would allure more institutions, supported by her bullish technical price analysis suggesting that bitcoin might surge towards approximately $35,000 per bitcoin.

Financial Safeguards

Bitcoin is an increasingly appealing option as a safeguard against banking vulnerability. Many believe that the Federal Reserve's reluctance to relax monetary policy amidst the banking crisis might push the American economy toward a recession. 

Although the overwhelming majority of observers are not convinced that BTC will supplant the USD, there are evident indications that the US dollar is losing ground to other cryptocurrencies. The US Dollar Index has declined by 8.9% over the previous six months and has experienced a 1.34% depreciation in value during the past year.

Success Begets Success

In recent months, Bitcoin has exhibited a growing momentum. The digital currency has risen by ~46% over the past six months and has shown a ~65% increase in value year-to-date. 

When fear hits the market, investors look for winners. 

Million dollar promises

Much chatter online over the past week have been Balaji Srinivasan’s $2M bet that Bitcoin, within the next 90 days, will be worth $1M per bitcoin. 

Srinivasan highlighted that, unlike previous instances when investors sought refuge in dollar-denominated assets during periods of turmoil, the current situation is distinct. He observed that historical trends indicate individuals tend to abandon depreciating currencies, a category in which the USD now falls. 

This bet, while incredibly unlikely, has attracted further attention, thus conversation and conversion to Bitcoin.

Investor Summary

Bitcoin has maintained its resilience due to institutional appeal, financial safeguards, growing momentum, and a recent $2M bet that Bitcoin will be worth $1M per bitcoin within the next 90 days. 

The recent banking crisis, which originated in the US and has extended to Europe, has led to a decrease in stocks in banks such as Deutsche Bank, Credit Suisse, and UBS. 

The recent decision by the Federal Reserve to increase interest rates by 25 basis points has led to optimistic remarks from Chair Jerome Powell, indicating that the central bank may be required to take a more aggressive stance if the banking crisis continues and affects other parts of the economy.

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