Thursday saw a rise in Bitcoin and Ethereum, following the less-than-optimal performance of banking stocks in the US.
Following Wednesday's scares of another banking crisis in the First Republic Bank, Bitcoin increased by more than 2% to $29,121, recovering from its low of $27,217 during the previous day's trading session.
But as of the time of writing, the cryptocurrency is slightly on the bearish side. The flagship cryptocurrency is trading 3.6% below yesterday's highs and is currently changing hands around the $28,700 zone according to data from CoinMarketCap.
In recent news, however, Bitcoin has now outshined gold, with investors turning to the cryptocurrency as a haven for their money, rather than using the traditional hedging asset.
This is despite Bictoin's volatility over the last few days, and how it simultaneously wiped out $175 million in both long and short trades when it rose from the $27,000 zone to $29,000 and then back to $28,000 where it now sits.
In the article, we examine the latest happenings on Bitcoin and attempt to make some sense of them.
Investors are using Bitcoin as a refuge for their money as the banking crisis continues to threaten the stability of the financial sector. In fact, due to its better returns and improved stability, more people are selecting cryptocurrencies over the conventional haven commodity, gold.
Trading around the $28,000 zone, BTC is currently changing hands close to the $30,000 psychological resistance, which had an incredible increase a few days ago, before normalizing to where it now sits.
The market analytics firm, Kaiko, mentioned in a tweet recently, that the increasing correlation between Bitcoin and gold, which has crossed the 50% mark and is currently at 57% may be the cause of this rise in demand for Bitcoin.
In March this year, regulators went after crypto-regulatory banks, sparking a banking crisis, as well as a fear contagion about the ability of traditional banking systems to hold against economic conditions like inflation and governmental influence.
This chain reaction, in turn, caused a rise in the correlation between Bitcoin and gold. Investors have thus started switching to Bitcoin as a more dependable substitute for Gold.
In recent years, Bitcoin has become a refuge asset for investors looking for a safeguard against conventional market hazards, compared to years ago when the cryptocurrency was regarded as "risky' or "too volatile".
Earlier, before crypto become the popular industry it is today, its erratic price swings and absence of governmental regulation made it a typical example of a highly "dangerous investment"
The truth of the matter is that Bitcoin functions independently from central banks, making it less susceptible to inflation and governmental meddling than traditional assets like fiat money and other forms of money.
Because of this, investors have a degree of financial independence and security unequalled by traditional assets like gold, bonds and stocks.
These characteristics have helped Bitcoin become more widely recognized as a haven asset, especially during periods of market and economic turbulence.
It has been a popular choice for people wishing to diversify their portfolios and safeguard their capital from outside dangers due to its capacity to offer investors a trustworthy and secure store of value.
At the same time…
Traders on either side of Bitcoin were hit by massive trade liquidations, because of the massive volatility in Bitcoin (BTC) during the previous few days.
Bitcoin moved violently in either direction this week, driven by fears of another banking crisis.
To the dismay of both bulls and bears, $1 billion in open interest and $175 million worth of positions were essentially liquidated over the last two days according to data provided by CoinGlass.
As shown above, more than 80 million in long trades and more than 70 million in shorts were liquidated on Thursday this week
Bitcoin futures liquidations on OKX totalled over $52 million, followed by peers Binance and OKX with $38 million and $29 million, respectively.
Overall, Bitcoin has lost most of its gains from the previous day and is now trading at -3% over the last day, just below the $29,000 zone.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.