Reaching the $30,000 mark shows Bitcoin has recovered from regulatory crackdowns and the FTX collapse.
Bitcoin climbed above $30,000 on April 10, marking a new 10-month high. The increase brings Bitcoin’s year-to-date gains up to 80% – a bullish recovery from the market chaos of 2022.
Ethereum, the second largest cryptocurrency by market cap, has also rallied above $1,900, bringing its year-to-date gains up to 60%.
Mati Greenspan, chief executive at Quantum Economics, said that “30k is very significant for both technical and fundamental reasons. The resistance has been building up for three weeks straight and has now finally broken.
“This is the first time we’ve crossed that level since the collapse of Terra/Luna and Three Arrows Capital. It basically means that the price has fully recovered from Celsius, FTX and the US regulatory crackdown.”
The rebound comes two days before the March CPI report and the long-awaited Ethereum Shapella (Shanghai/Capella) upgrade.
Both events are likely to add volatility to the market.
Typically, higher-than-expected inflation puts negative pressure on volatile assets such as cryptocurrency as it indicates broader macroeconomic strain. While some are hopeful that inflation will continue on a downward trend, the Federal Reserve said that further interest rate hikes may be appropriate.
The good news is that CPI-related volatility tends to be short-term, since data is released monthly.
Similarly, the extent to which the Ethereum upgrade will increase volatility is unclear.
The Shapella upgrade, set to go live tomorrow, will enable validators to withdraw staked ether for the first time since 2020. With $2 billion in staked ether set to be unlocked, there’s a chance that selling pressure may increase, but there are several reasons why this may not be the case, namely:
- A majority of ETH stakers staked their ether through liquid staking protocols, so liquidity won’t be anything new. Those who didn’t stake through liquid staking, such as validators who operate independent nodes via a commitment of 32 ETH, are unlikely to panic and sell post-upgrade. (Read here to learn more about liquid staking.)
- Many ether stakers will be staking at a loss, so there’s little incentive to withdraw.
- Withdrawals will happen gradually over the coming year on a first-come-first-serve basis in order to maintain an optimum number of validators in the network.
What has contributed to the rebound?
The Bitcoin bull cycle cannot be pinned down to any particular event, but the banking massacre of March seemed to have an overall positive impact on the crypto.
In March, three crypto-friendly banking giants – Silvergate Bank, Signature Bank and Silicon Valley Bank – collapsed in stunning succession, squeezing access to liquidity. Bitcoin rallied in spite of this, likely in part due to lack of trust in the traditional financial structure.
While Bitcoin has performed well over the past week, regulatory pressure continues to increase.
Elon Musk is currently facing a $258 billion Dogecoin lawsuit; Coinbase Global has received a notice from the US Securities and Exchange Commission (SEC) declaring its intention to bring an enforcement action, and crypto mogul Justin Sun has been sued by the SEC for allegedly violating securities rules (an allegation which Mr Sun denies).
The Commission has also sued Binance and its CEO Changpeng Zhao for alleged violations of derivatives regulations. In response, Zhao said “the complaint appears to contain an incomplete recitation of facts, and we do not agree with the characterization of many of the issues alleged in the complaint.”
The coming week will certainly be an interesting one, and only time will tell if Bitcoin will hold its new 10-month high.
Disclaimer: CryptoPlug does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.