Bloomberg reported that Bitcoin exceeded $28,000 for the first time since June last year.
The media analyzed that bitcoin prices reached their highest level in about nine months due to financial market turmoil, higher-than-expected prices, and expectations for the U.S. Federal Reserve's easing of tightening stance. Bitcoin has soared about 70% this year alone.
On this day, Bitcoin surpassed $28,000 as market jitters were resolved as news broke that Swiss No. 1 bank UBS would acquire CS, which was in crisis. Earlier, Swiss authorities announced that UBS would acquire CS for 3 billion Swiss francs.
The U.S. Federal Open Market Committee (FOMC) regular meeting scheduled for the 21st-22nd seems to have affected the surge in Bitcoin. After the collapse of U.S. small and medium-sized banks and the deepening CS crisis, some investors argue that the U.S. Federal Reserve (Fed) should freeze interest rates, but observers say the Fed may raise interest rates further to stabilize prices. Bloomberg said, "Uncertainty (about U.S. interest rates) is increasing and instability is creating in the financial market, while Bitcoin buyers see digital assets as a countermeasure against inflation."
According to the Chicago Mercantile Exchange (CME) Fed Watch, there is a 77.5% chance that the Fed will raise interest rates by 0.25 percentage points at the March meeting in the Federal Fund (FF) rate futures market and a 22.5% chance to freeze interest rates.
"Bitcoin is correlated with liquidity conditions and real interest rates," said Elan Solot, general manager of virtual assets at derivatives company Marex Solutions. "It is expected to enter a new system in the future as real interest rates fall and liquidity conditions expand."
Edward Moya, the chief strategist at foreign exchange broker Oanda, analyzed that the U.S. regulators' opening of the possibility of acquiring the recently bankrupt Signature Bank's virtual asset division also affected the Bitcoin surge. Moya said in a memo, "Signature Bank is a major virtual asset bank in the United States, and the survival of the business is key to the long-term growth outlook of the virtual asset world." The expert predicted that Bitcoin could surpass $30,000 if the Fed freezes interest rates.
Edited by: Palak Chauhan
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