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Business News/ Markets / Cryptocurrency/  Why Bitcoin, other cryptocurrency prices have been rallying
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Why Bitcoin, other cryptocurrency prices have been rallying

Most cryptocurrencies have gained momentum in the recent days

Bitcoin cryptocurrency representation is pictured on a keyboard in front of binary code in this illustration (REUTERS)Premium
Bitcoin cryptocurrency representation is pictured on a keyboard in front of binary code in this illustration (REUTERS)

Most cryptocurrencies have gained momentum in the recent days with Bitcoin price hovering above the $28,000 level for the first time since June 2022. The largest digital coin has gained roughly 25% since March 8, when signs first emerged of trouble around Silicon Valley Bank (SVB), which has since folded and ignited turmoil among other lenders. 

Bitcoin has been experiencing a surge in value over the past few days due to instability in the banking sector, higher-than-expected inflation data, and renewed confidence in a dovish Federal Reserve, bringing it to its highest level in approximately nine months. The global crypto market was valued at US$1.18 trillion during this period. On Monday, major central banks made coordinated moves, including the Federal Reserve to improve market liquidity. This might have also contributed to the upward sentiment in the market," said Edul Patel, Co-founder and CEO at Mudrex.

The crypto market experienced a bounce last week. The pump, as per experts was caused by a combination of factors, including a massive short squeeze, a billion-dollar buy by Binance, and the Fed's response to the banking crisis, and news on Ethereum’s update. 

“According to Block statistics, nearly $300 million in leveraged BTC short positions were liquidated in the last week. This amounts to more than $300 million in buying pressure for BTC. During a bear market, this is quite substantial because it doesn't take nearly as much money to drive prices up or down. Binance's conversion of $1 billion in BUSD into BTC, ETH, BNB, and other unnamed cryptocurrencies is likely to have contributed to the recent rise. Another reason is the official announcement of the Ethereum Shanghai hard fork update date (April 12), which will allow users to withdraw their staked Eth and is expected to stimulate Ethereum market demand," said Rajagopal Menon Vice president WazirX.

"However, caution remains the need of the hour as the banking sector news can still impact market sentiments. Regulators may continue to make it difficult for banks to process crypto-related transactions, as has been the case with Signature bank. Another thing to look out for will be the Fed's meeting on Wednesday," said Parth Chaturvedi, Crypto Ecosystem Lead, CoinSwitch.

(With inputs from agencies)

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Published: 21 Mar 2023, 10:56 AM IST
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