Despite the Collapse of Major Crypto-Focused Banks, Bitcoin is Pumping

Following the collapse of two major crypto-friendly banks within the last two weeks, bulls seem determined to end bearish trends as Bitcoin price soars above its highest levels since summer 2022. The uptrend in BTC price has caused a widespread price increase in the value of tokens in the best crypto wallets in the UK.

Ethereum is currently up 22%, while other altcoins closely trail behind both tokens. This article delves into why the bitcoin price has been pumping in the last weeks.

Overview of $BTC in 2023 

Multiple project failures, liquidity issues, and bankruptcies, specifically the failure of the world’s second-largest cryptocurrency exchange, FTX, have heavily disrupted the crypto ecosystem since the onset of the crypto winter. So this year’s continuous price surge is a welcome trend after a 65% crash in 2022.

At the beginning of the year, $BTC traded at $16,500 and has maintained steady growth. It crossed the $24,000 mark in February and shot above the $25,000 mark last week. This shows over 40% growth since the year started, beating major commodities and stock indexes.

Why is Bitcoin Price Pumping?

Here are some significant reasons why $BTC is up this week:

Bank failures 

Experts attribute Bitcoin’s recent rebound run to Silvergate and SVB’s unexpected failures. In addition, experts in the crypto community have pointed out that the decentralized structure of cryptocurrencies, built on a blockchain and not controlled by a single entity, contrasts with the centralized control of these traditional banking institutions.

Luno’s vice president of corporate development and international, Vijay Ayyar, remarked that recent events involving the collapse of SVB and other banks highlighted the potential of decentralized currencies that individuals could own and manage. He emphasized that decentralized finance is now gaining greater traction as a concept among a wider audience. 

Increasing feds interests rates

In the last twelve months, the US Federal Reserve raised interest rates several times, causing depositors to withdraw their funds from banks. SVB, for instance, had to sell assets and treasuries at a significant loss to stabilize its balance sheets.

According to some analysts, the banking sector’s strain caused by the rising interest rates benefits risky assets like equities and bitcoin. However, rising crypto lender Nexo’s cofounder Antoni Trenchev says the rampant structural deficiencies in the US traditional finance sector give bitcoin and altcoins a fighting chance. 

The demand for Bitcoin will continue to increase because investors see it as a better way to protect themselves against the central bank’s monetary policies. 

What’s Going to Happen Next?

Crypto analysts predict that BTC will continue to hover between $20,000 and $30,000 for the next few months. You can expect short periods of volatility due to global liquidity and monetary policies.

Recall that on March 14, BTC attained a new yearly high, but a lengthy upper wick was formed. The price later fell back and confirmed the $24,000 region as support. Since then, the price has been trending upward and is on the brink of another yearly high. 

In the event of sustained upward momentum, BTC’s cost could reach $28,711 in a few weeks. However, a decline to $21,500 may occur if the price breaks down.

What’s next for altcoins?

Many networks have started shifting from Bitcoin’s ‘Proof-of-Work’ (PoW) consensus to a ‘Proof-of-Stake’ (PoS) algorithm, which is more scalable and environmentally friendly. If Bitcoin continues this gradual uptrend, numerous altcoins will emerge to leverage its success. However, most of these altcoins will be superior to bitcoin in speed and scalability. 

Despite Bitcoin’s technology becoming outdated, the coin is still gaining popularity as a payment method worldwide. Two developing nations have adopted Bitcoin as an official currency, and numerous small businesses now accept it as payment. 

Bitcoin ATMs have also become more popular, with over 30,000 worldwide. This prevalence is expected to contribute to the currency’s continued growth.