Bitcoin Soars 84% To Reach 2023 High as Fed Expected to End Rate Hikes

Bitcoin Soars 84% To Reach 2023 High as Fed Expected to End Rate Hikes

The price of bitcoin (BTC) rose above the psychological $30,000 mark for the first time since June 2022. The cryptocurrency’s solid gains are attracting investors who are betting that the U.S. Federal Reserve will soon put an end to its aggressive monetary tightening campaign.

BTC reached $30,397 on Tuesday, up 84% from $16,540 at the start of the year. As of writing, the benchmark token is trading 6.1% higher at $30,094, according to CoinGecko data. Since the beginning of this month, bitcoin has gained 7% and rose 23% in March.

Other leading crypto assets including ethereum (ETH), ripple (XRP) and cardano (ADA) have all seen major gains in recent months, helping to push the total crypto market capitalization by over $400 billion to $1.24 trillion.

Also read: Controversial Crypto Investor Sifu Loses $3.3M in SushiSwap Hack

Positive rates outlook help BTC higher

ETH, the second-largest crypto asset, is trading near last week’s eight-month peak of $1,942 and is currently 2.7% higher at $1,915 on the day.

Investors are eagerly anticipating a major revamp to the Ethereum blockchain, dubbed Shapella, which will allow them to access more than $33 billion of the ether currency.

Bitcoin Soars 84% to Reach 2023 High as Fed Expected to End Rate Hikes
Bitcoin price ($): CoinGecko

Analysts say the jump in BTC prices is attributed to the positive outlook on rates. They point to the banking sector turmoil triggered by the collapse of Silicon Valley Bank (SBV) in March.

The crisis lifted market expectations the Fed is unlikely to raise interest rates much higher for longer to ease stress on the sector. As a result, traders are now more optimistic about the central banks’ monetary policy, leading to the broad-based rally in crypto, they say.

“Momentum has steadily built for bitcoin as investors digest macroeconomic shifts in data,” said Simon Peters, a crypto market analyst at the online trading platform eToro, as reported by The Independent.

“The next one markets will be watching is U.S inflation. If inflation continues to recede, we could see some consolidation above $30,000. The price is still wavering around the milestone currently.”

Tina Teng, a markets analyst at CMC Markets, explained, “bets for a sooner Fed pivot on rate hikes have been dramatically strengthened following the bank turmoil in early March.”

More optimism

Despite its recent gains, bitcoin remains 57% off its all-time-high of $69,000 reached on Nov. 10, 2021. But that hasn’t stopped market players from sounding upbeat about what may be coming next after the asset’s latest surge.

Accountant and bitcoin investor Timothy Patterson claimed to have built a model, “perhaps one of the most reliable I’ve developed,” which is predicting BTC will reach a new peak by September, building on the current momentum (see below).

Other investors are more cautious and feel this is an opportune time to take positions.

“Whenever I see whole Crypto Twitter going bullish like $40k next, I get scared and feel like it’s time to take profits and sit on the sidelines. Let’s take one step at a time and wait for $30k – $32k to break, for that to happen Bitcoin needs to close above $29k today,” said one user in a tweet.

According to a report by NYDIG, bitcoin outperformed all other asset classes in the first quarter of 2023, rising 72%. BTC’s steady jump could signify the end of the crypto winter, a term that refers to a prolonged period of declining prices and market activity in the crypto market, per some analysts.

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