Bitcoin raced past the $60,000 price mark for the first time in 6 months. Over the last week, the largest cryptocurrency by market capitalization, Bitcoin, has outperformed the broader crypto segment and is less than 6% away from its all-time high of $64,889.
The harshest ban coming from China on all crypto transactions last month has had little impact on the crypto market. It took less than a month for Bitcoin to rally back to the top from the rout caused by the Chinese ban.
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What Triggered the Bitcoin rally?
Experts believe a handful of factors have played out lately in favour of Bitcoin that have caused a positive sentiment among investors. Let’s walk you through each one of them and its impact on the crypto market.
Digital assets too large to be ignored: Bank of America
Bank of America (BoA) released a report last week titled, “Digital Assets Primer: Only the first inning.” In the report, the bank understates the importance of Bitcoin and the potential digital asset ecosystem holds to disrupt various sectors like finance, technology, supply chain, social media, and more.
“With a $2tn+ market value and 200mn+ users, the digital asset universe is too large to ignore. We believe crypto-based digital assets could form an entirely new asset class,” the opening remarks of the report noted.
The bullishness shown by the second largest bank in the United States has caused a ripple effect on the market.
Encouraging signs from the SEC
Another major development for Bitcoin comes from the accommodative stance taken by the Securities and Exchange Commission (SEC). Initially, investors’ confidence skyrocketed after the SEC’s recent approval of an ETF (Exchange Traded Funds) made up of stocks with exposure to Bitcoin.
And in a first, the SEC green-lighted a Bitcoin Futures ETF last Friday, marking a watershed moment in the growth of crypto industry in the US. In the long run, this opens crypto assets to a wider investor base and provides a regulated alternative to people interested in Bitcoin. Meanwhile, the immediate result was a spike in the value of Bitcoin.
ETFStore President Nate Geraci told CoinDesk that “the availability of a bitcoin ETF will now bring more investors under the crypto tent and facilitate greater education across the space.”
Bitcoin: A Hedge Against Inflation
Amid the rising inflation, Bitcoin is seen as a reliable store of value. The US’s excessive printing of money has put off investors from holding cash. And for many institutional investors in recent weeks, Bitcoin is an asset of choice better positioned to protect purchasing power than gold.
JP Morgan’s Nikolaos Panigirtzoglou echoed this trend in a research report last week. “Institutional investors appear to be returning to Bitcoin perhaps seeing it as a better inflation hedge than gold,” he noted.
The report also highlighted the reemergence of a shift into Bitcoin from institutional investors in the recent weeks similar to the one that drove the late-2020’s bull run.
Along with the growing institutional adoption, recent weeks saw a record daily settlement of $31 billion worth of transactions which played a role in propelling the price of Bitcoin to a 6-month high.
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