On Monday, Bitcoin, the world’s largest cryptocurrency, hit a nine-month high, driven by growing turmoil in the banking sector that is pushing some investors toward digital assets. The cryptocurrency rose to as high as $28,567, its highest level since mid-June, and was up 0.9% as investors began to expect central banks to slow the pace of interest rate hikes.
Bitcoin had its best week in four years, rising 26% last week and surging around 40% in just ten days, largely due to the turmoil in the banking sector that is affecting markets worldwide. The sector saw UBS Group take over rival Credit Suisse Group AG, a move aimed at restoring confidence in a sector that has been battered in recent months.
The state-backed takeover of Credit Suisse by UBS has caused traditional assets, including banking stocks and bonds, to plummet. This situation led top central banks to take action on Sunday to support the flow of cash around the world. It is the first global response of this kind since the height of the COVID-19 pandemic.
According to Tony Sycamore, an analyst at IG Markets, Bitcoin’s stunning rally is a result of the banking crisis and the fact that interest rate markets are pricing in rate cuts in the second half of 2023. He predicted that Bitcoin could move towards $32,000 if it holds above the key support level of about $25,000.
Other market participants believe that Bitcoin will benefit from central bank efforts to bolster liquidity in the global financial system. The cryptocurrency reached a record high of $69,000 in November 2021 after central banks and governments launched unprecedented monetary and fiscal stimulus measures.
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