For bitcoin, 2023 has been a year of vast turnaround. A report was issued in late March showing that the world’s number one digital currency enjoyed three straight months of solid gains, and the asset doesn’t appear to be showing serious signs of slowing down.
Bitcoin Has Had a Great Year Thus Far
This is a huge reversal of what was witnessed in 2022, obviously the worst year on record for crypto. The space wound up losing more than $2 trillion in valuation after assets like bitcoin lost 70 percent or more from their previous November 2021 all-time highs. During that period, bitcoin was trading at a whopping $68,000 per unit, though just 12 short months later, the currency dropped into the mid-$16K range. It was a sad sight to see.
But not long ago, the digital asset enjoyed a nine-month high, and March saw bitcoin extend its rally and price by more than 20 percent. This brings its overall jump since the beginning of the year to over 70 percent. This also marks the best quarter on record for bitcoin since early 2021, the beginning of a major bull run. Jeff Cantwell – an equity analyst at Wells Fargo – explained in a recent statement:
The rally has continued in March even after recent bank closures. While the rebound has more than one underlying reason, our conversations with investors have centered on three: crypto as a ‘flight to safety’ given banking turbulence; positioning (short covering); and a shift ‘at the margin’ by investors to ‘risk on’ as prospects of a Fed pivot have increased.
It appears the banking crisis Cantwell is speaking of has done wonders for bitcoin. There’s so much distrust, suddenly, surrounding the world of standard finance that many have turned to more speculative (and riskier) assets like BTC as a means of keeping their financials safe. There’s no guarantee that the bank they work with is going to remain afloat, and thus bitcoin and various digital currencies suddenly seem like safer bets.
Callie Cox, an analyst at investment firm e-Toro, commented:
Bitcoin still seems to be in a favorable light, but only if growth stays healthy as well. A recession could still pressure crypto prices considering it’s still such a retail-dominated asset, and high rates are still an obstacle… The banking news narrows the gap for a soft landing and increases the chance of seeing an extreme scenario in either direction.
Don’t Just Jump Back in Yet…
She added:
For now, it’s anybody’s guess how crypto weathers either extreme scenario – a recession or persistently high inflation. We’re seeing signs of some buying exhaustion, too – flows out of crypto exchange-traded products, bad reactions to good news. Crypto investors should still tread carefully. Bitcoin’s strong streak this year isn’t necessarily a green light to pile back in.
