Key takeaways
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Bitcoin is trading above the $28k level for the first time since June 2022.
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Coinjournal’s Dan Ashmore believes that the interest rate forecasts are responsible for the ongoing rally by Bitcoin and other cryptocurrencies.
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Many in the market still consider the recent banking crisis as the reason why investors are entering the crypto market.
Interest rate forecasts behind Bitcoin’s rally
Bitcoin, the world’s largest cryptocurrency by market cap, has been performing excellently over the past few weeks. At press time, the price of Bitcoin stands at $28,411, up by 13% over the last seven days.
Many in the crypto space attribute the ongoing crypto rally to the collapse of a few banks, including Signature Bank, Silvergate Bank, and Silicon Valley Bank.
However, during an interview with CNBC, Coinjournal’s Dan Ashmore pointed out that Bitcoin’s rally has to do with the interest rate forecasts rather than the recent banking crisis.
https://twitter.com/DanniiAshmore/status/1638175918123548675
Regarding the ongoing rally, Ashmore said;
“It is a reaction to the complete flip in interest rate forecasts in the wider economy. If you go back to before the Silicon Valley Bank collapse, there was an 83% probability that the interest rate would be increased by 100 basis points by the summer. Today, when we look at that, it is completely the opposite, and there is almost 100% of rate cuts.”
He added that the crypto market is reacting to the probability that the Fed’s recent interest rate hikes are coming to an end.
Interest rate cut is music to crypto investors
With Bitcoin trading at $28k per coin, investors would be optimistic that prices could soar higher over the coming days and weeks.
According to Ashmore, cryptocurrencies trade as risk-on assets, and an interest rate cut is music to the ears of crypto investors.
Ashmore also discussed the correlation between cryptocurrencies and tech stocks. According to the Coinjournal analyst, while many expect crypto to be an independent hedge, the assets still very much correlate with the stock market, especially tech stocks. He concluded that
“The NASDAQ index rises, Bitcoin’s price also rises. The NASDAQ falls, and Bitcoin also falls a little more. The last couple of weeks have been interesting as Bitcoin has outperformed the NASDAQ. But it is a reflection of the fact that Bitcoin is trading in correlation with the interest rate forecasts.”