• Bitcoin’s price has been on the rise since the failure of Silicon Valley Bank (SVB) on March 10.
• Narratives around bank failures, stablecoins and interest rate hikes have propelled bitcoin’s price to new highs.
• Federal Reserve Chair Jerome Powell has noted that people’s expectations of inflation have a real effect on inflation.
Bank Failure Fuels Bitcoin Price Increase
Silicon Valley Bank (SVB) failed on March 10, and since then the price of bitcoin (BTC) has been on a tear. In the early hours of March 10, bitcoin was trading around $19,600. It whipsawed just above and below $20,000 until around 12 p.m. ET when it was announced that SVB was going into FDIC receivership. At that point, bitcoin shed $200 to dip below $20,000, jumped around a bit and spent most of the weekend trading above $20,000. By Monday morning at 9:30 am ET it was trading at $22,386 – and then in just 24 hours later it had risen to trade at $26,175 with a peak of even touching up against $26,500 as of publication time.
The Role Of Narrative In Asset Prices
CoinDesk research analyst George Kaloudis points out that narrative matters a lot when it comes to the price of assets – this is backed up by Federal Reserve Chair Jerome Powell who remarked that “people’s expectations of inflation have a real effect on inflation.” In this case narratives around bank failures, stablecoins and interest rate hikes seem strong enough to propel the price of bitcoin even higher than before SVB’s bankruptcy announcement.
Stablecoins And Interest Rates As Drivers Of Bitcoin Prices
Stablecoins are an important factor in driving up bitcoin prices as their use enables easier access for individuals seeking safety from volatile markets or those interested in investments outside traditional currencies such as USD or EURO which are subject to changes in central bank policies like quantitative easing or currency devaluation. The potential for higher interest rates also plays an important role as investors seek out higher returns when risk-free options like treasury bonds yield lower returns due to increasing central bank intervention policies targeting low-interest rate environments. This can further be seen in countries like Japan where yields on government debt remain very low while bitcoins continue to hit all-time highs during periods where investor sentiment favors riskier assets over safety plays like government bonds or gold ETFs..
Bitcoin Is A Clear Winner Of The US Banking Crisis
Given these factors combined with recent news highlights related to the US banking crisis such as SVB’s failure mentioned earlier it is clear that bitcoin stands out as one of the main beneficiaries from these events and will likely continue its upwards trajectory in terms of both market capitalization and investor sentiment towards cryptocurrencies overall..
In conclusion it appears that both narrative along with more tangible factors such as rare safe haven assets like BTC coupled with high demand from investors looking for higher yields propels bitcoins prices skyward during times when traditional asset classes are not performing optimally due to external factors such as central bank interventions or banking sector issues thereby making BTC a clear winner in terms of benefits derived from current macroeconomic conditions facing many economies worldwide today!