Bitcoin broke through the $30,000 level on Monday for the first time since June 2022 as investors predicted that the U.S. Federal Reserve would loosen its tight monetary policy shortly.
The cryptocurrency traded around $30,237, gaining 6.75 percent over the past 24 hours. Market data showed that Bitcoin last traded above $30,000 on June 10, 2022, before it continued its downward slide to below $20,000.
From a technical perspective, reclaiming the A-wave support is the first step in establishing a new bullish trend in #Bitcoin pic.twitter.com/6q6thjS5iI
— Tony "The Bull" Severino, CMT (@tonythebullBTC) March 29, 2023
Bitcoin began 2023 by trading at around $16,600 and hovered below the $20,000 level in the first few weeks of the year before its recent rally. The token has gained about 80 percent since New Year. Banxa U.S. CEO Richard Mico called Bitcoin the "best-performing asset of 2023."
Recent banking stresses fueled Bitcoin's rally, according to analysts. Last month, two large regional lenders in the U.S. collapsed, creating a crisis of confidence in the banking system. The situation heightened when the Swiss major commercial bank Credit Suisse reported a liquidity crunch, prompting Swiss National Bank to engineer its buyout.
Mico explained that Bitcoin gained momentum during the crisis because there was a changing narrative among investors about the token's ability to hold value.
"BTC is also being seen as a reliable store of value that lacks the issues that come with storing your money by way of a third-party intermediary, or a bank," Mico said. "BTC is now properly starting to be perceived as a risk-off asset."
Bob Ras, a co-founder of the tokenization platform Sologenic, noted that Bitcoin had disengaged from stocks and increased its appeal as a "safe haven" for the market. Previously, Bitcoin's movement largely depended on the stock market, in which the token gained when stocks plunged and vice versa.
"Undeniably, Bitcoin is decoupling from traditional equities and demonstrating its increasing appeal as a safe haven for investors across retail and institutional spheres."
Bob Ras, co-founder of Sologenic.
According to Ras, Bitcoin is now ascending as a "formidable asset" in the global market amid increasing geopolitical instability and concerns about the soundness of the banking system. He added that it was significant progress for Bitcoin and the entire digital asset sector.
Mico said Bitcoin was sensitive to various monetary shifts linked to the Fed's policy. Fed officials discussed the importance of creating policy according to economic data after they decided on a 25-basis-point rate increase in the latest policy meeting.
Recent inflation data so far showed signs of economic slowdown. The private payroll report showed lower-than-expected job additions in the private sector last month. March's job report published last week revealed 236,000 added non-farm payrolls, indicating a slowing hiring process.
Many investors predicted that the Fed would maintain the benchmark rate at the current range of 4.75 to 5.00 percent in the next rate-setting meeting due to recent data.
https://twitter.com/MacnBTC/status/1642900228234674176
Investors wait for new inflation data
The U.S. Bureau of Labor Statistics will publish the March consumer price index or CPI on Wednesday. Experts said the new data would further shape the Fed's rate policy in early May.
The headline consumer price growth is expected to be 5.1 percent, the lowest in almost two years. Meanwhile, the core consumer price index, which excludes food and energy costs, will likely show a 0.4 percent month-over-month increase.
Analysts cautioned that the index might miss the downward trajectory target next month due to a recent spike in oil prices. Earlier this month, OPEC+ announced that it would cut oil production, leading to a sharp increase in oil prices, affecting prices for other goods.