• Bitcoin has had a successful 2023 thus far, spiking by as much as $12,000 in the last three months.
• Analysts attribute this growth to central bank hikes and the fact that credit costs are nearing their peak.
• Additionally, many investors believe bitcoin will eventually replace credit cards and fiat currencies as the ultimate payment method.
Overview of Bitcoin’s Success
Bitcoin has reached a new nine-month high of $28,000 in 2023, representing quite a turnaround from its losses of more than $2 trillion in valuation during 2022 when it lost as much as 70 percent of its value.
What’s Fueling These Gains?
Noelle Acheson, an economist tracking the crypto sector for seven years, believes the banking failure of America is largely behind the rise due to increasing credit costs and people turning away from centralized financial services to alternative methods such as bitcoin. Additionally, there is belief that bitcoin will one day serve as the ultimate payment method replacing credit cards and checks.
Analysts Weigh In
Usman Ahmad – CEO of Zodia Markets – dismissed the idea that BTC is doing well because banks are not doing well but stressed confidence is still a critical factor in bitcoin’s success. He also stated that confidence in the banking system has been damaged which could further contribute to bitcoin growth.
The Macro Narrative
Acheson explains that “the macro narrative is number one” for bitcoin’s success and highlights its sensitivity to monetary liquidity out of all risk assets which contributes significantly to its gains.
Overall analysts agree that while it is easy to assume banking failures have propelled bitcoin’s sudden rise, there are multiple factors at play including central bank hikes, rising credit costs and decreased confidence in traditional banking systems driving people towards alternative investments such as cryptocurrency.