• Bitcoin has surged beyond $26,000 as investors expect lower interest rates and surging crypto prices.
• The collapse of Silicon Valley Bank and Silvergate sent shockwaves throughout the market, affecting USDC reserves and amplifying fears about solvency.
• However, the US government stepped in to guarantee deposits would be made whole, calming market panic and setting off a rally in crypto prices.
Bitcoin Surges Beyond $26K
Bitcoin has surged beyond $26,000 as interest rate expectations flip. Investors are dreaming of a return to a lower interest environment that could see crypto prices surge.
Inflation Reading Adds Momentum
The most recent inflation reading provided further impetus to the rally, with investors encouraged by potential for higher returns on risk assets such as cryptocurrencies.
Reasons For Suspicion
Despite the excitement surrounding this run-up, there are reasons to be hesitant here. The shutdown of three major crypto banks will hurt industry confidence while bearish developments have been seen since the start of the year. Furthermore, decoupling from other risk assets is unusual and has not been seen to this extent since 2021.
US Government Steps In To Shore Up Crisis
The US government stepped in to shore up the crisis and guarantee deposits would be made whole after SVB’s collapse last week was followed by Silvergate’s fall. This calmed market panic and set off a rebound in cryptocurrency prices.
Market Expects Fed To Halt Interest Rate Hikes
The banking sector wobble shifted market expectations surrounding future path of interest rate hikes causing Fed futures currently imply a 72% chance of no hike at next week’s meeting – encouraging investors who expect higher returns on risk assets such as cryptos