Bitcoin bulls are back, as the biggest crypto token by market capitalization surged past $28,000 for the first time since June.
The coin was trading at $28,399 at 3:09 p.m. EDT on Sunday, up 5.2% over the past 24 hours, according to TradingView data. It's surged a staggering 37.8% over the week and is up 20.8% over the past month.
The rally comes amid speculation that the Federal Reserve could slow, or even pause, the pace of interest rate increases this week as contagion from the collapses of Silicon Valley Bank and Signature Bank continue to reverberate around the world. Credit Suisse is the latest financial institution to fall victim. CME's FedWatch tool shows a 62% chance that rates will be hiked by 25 basis points, with the chance that rates are unchanged coming in at 38%.
The Federal Reserve on Sunday announced a coordinated action with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank to enhance the provision of U.S. dollar liquidity.
"To improve the swap lines' effectiveness in providing U.S. dollar funding, the central banks currently offering U.S. dollar operations have agreed to increase the frequency of 7-day maturity operations from weekly to daily," the Federal Reserve said in a statement.
Bernstein analysts Gautam Chhugani and Manas Agrawal said Saturday that the crypto rally was due to a reset in the risk profile of assets. They said uninsured deposits of cash are no longer seen as the safe haven they once were.
Interest in central bank digital currencies is rising, but these so-called CBDCs are "far from ready except some academic pilots," they wrote.
They concluded: "But then what is the closest that comes with no-counter-party risk, decentralized and with complete self-custody - Bitcoin!"
They said that cryptocurrencies are volatile, but have outperformed the U.S. dollar, gold and stocks over long periods.
Twitter users and commentators were quick to jump back on the bitcoin bull bandwagon on Sunday. Many referenced the banking crisis and ongoing money printing by the Fed.
"You can't be bearish on scarcity assets once the FED is printing!," one user wrote.
"People would rather hold their wealth in #Bitcoin than in a bank…," said another. "Next week if we see another bank bailout, #Bitcoin will break $30,000."
(With additional reporting assistance from Adam McCarthy. Updates with statement from Federal Reserve in fifth paragraph.)
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