Bitcoin (BTC) has hit new nine-month highs as events in the growing United States banking crisis boost crypto markets. On March 17, BTC/USD hit $27,025 on Bitstamp before consolidating, and at the time of writing the pair circled $26,500 with ongoing volatility after the Wall Street open. A catalyst for fresh upside had come in the form of the Federal Reserve’s balance sheet data overnight, which showed nearly $300 billion being injected into the economy as part of the banking crisis response. This event effectively undid months of liquidity removal under the Fed’s quantitative tightening (QT), and commentators were quick to call the opposite phenomenon “quantitative easing” (QE).
In his latest markets blog post, Arthur Hayes, former CEO of derivatives giant BitMEX, revealed a pivot of his own. In an extensive dissection of current Fed behavior and its potential consequences, Hayes concluded that Bitcoin was a firm haven – in contrast to stocks. “For me and my portfolio, I’m largely done trading stonks. What’s the point? I generally buy and hold and don’t trade around my positions that frequently. If I believe what I wrote, then I am signing myself up for underperformance,” he revealed. “If there is a short-term trading opportunity where I think I can earn some quick fiat duckets and then take my profit and buy more Bitcoin, I will do it. Otherwise, I am liquidating most of my stock portfolio and moving it into crypto.”
The banking crisis and its quantitative easing response indicate a loss of trust in the US dollar and other fiat currencies. This has resulted in investors seeking out alternative assets, such as Bitcoin, as a hedge against inflation and devaluation. Bitcoin’s decentralized nature, limited supply, and high algorithmic complexity make it an attractive investment option. It is a scarce asset in a time of monetary expansionary policy, and its total supply is capped at 21 million coins. This limited supply naturally makes it a hedge against inflation, as its value should rise during times when fiat currencies are being devalued.
Bitcoin’s recent price performance has helped to reinforce its value proposition. The cryptocurrency’s upward trajectory is evidence of its resilience in the face of economic uncertainty, while its growing adoption and regulatory acceptance suggest it is becoming more mainstream. Increasing numbers of investors are considering Bitcoin as an investment option instead of equities, commodities, and even gold.
Furthermore, Bitcoin has gained increasing use cases beyond its original purpose as an electronic cash system. It is now being used in a variety of sectors, including the gaming and entertainment industries, real estate, and even global trade. A recent partnership with Visa is helping to bring Bitcoin to traditional payment systems, making it easier for consumers to buy and spend BTC. This is a significant step towards making Bitcoin a more accessible and widely adopted currency.
In conclusion, the growing United States banking crisis has caused many investors to seek refuge in Bitcoin, which has responded positively with continued upward momentum. As Arthur Hayes noted, Bitcoin is becoming an increasingly attractive alternative to stocks, which are suffering from a loss of trust and volatility. As investors continue to seek out alternative assets, Bitcoin’s limited supply and growing adoption and acceptance make it an attractive proposition. Its increasing use cases beyond its original purpose as an electronic cash system are further evidence of its growing value proposition.
