Bitcoin has recouped almost all of its losses in 2022 after cryptocurrencies resumed their rally on Friday to climb above $26,000 for the second time this week.
Bitcoin ended up 7.46% higher at $26,868.39, according to Coin Metrics. It posted a weekly gain of 34.13% and its best week since January 2021, which was just before the first bull run of the year.
Ether is up 3.87% to $1,745.57. For the week, it ended up 22.88%, its best weekly gain since August 2021.
Prices rose even as shares fell on Friday as traders digested the future of Credit Suisse. The bank’s fate continued to weigh on investors even after the ailing lender announced it would borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank.
“Bitcoin is very sensitive to liquidity and the liquidity outlook has improved,” said Dessislava Aubert, an analyst at crypto data provider Kaiko. “Data yesterday showed the Fed’s assets increased by about $300 billion… While the new BTFP facility is not direct QE, the Fed is essentially injecting liquidity into the banking system by lending more than the pledged collateral market conditions are worth .”
“China is also adding liquidity by lowering its bank reserve requirement ratio,” she added. “So essentially it’s an emotion-driven move.”
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Bitcoin (BTC) this week
Yuya Hasegawa, an analyst at Japanese crypto firm Bitbank, said that a close above $26,000 for Bitcoin could signal the start of a bull market. Fairlead Strategies’ Katie Stockton said two consecutive closes above $25,200 – next Sunday and the next – could signal a bullish long-term move.
Investors have welcomed robust crypto prices this week amid the banking crisis. The week started with the closures of Silicon Valley Bank and Signature Bank late Sunday, but attention has been on First Republic Bank throughout the week. Late Thursday, several major US banks stepped in to support them with $30 billion in deposits.
Many have hinted that Bitcoin is undergoing a narrative shift amid the banking crisis. However, the cryptocurrency’s price movements are still heavily influenced by inflation and rate hikes by the Federal Reserve.
“I still don’t see enough evidence that the Fed will end its higher stance for any length of time, even if it stops raising rates,” said Callie Cox, US investment analyst at eToro. “High interest rates are difficult for speculative cryptos to survive. I also think it’s especially important to understand how your investments make money and what the risks are. High interest rates can weed out the herd and the big ones could get bigger. We’re essentially seeing this happening in the traditional banking system right now.”
