LONDON/HONG KONG (March 20) (Reuters) – Bitcoin surged to a nine-month high on Monday as turmoil in the banking sector prompted some investors to turn to digital assets, as the cryptocurrency built on its best week in four years.
The largest cryptocurrency rose to $28,567, the highest level since mid-June, and last rose 0.9%, amid growing expectations that central banks will slow the pace of interest rate hikes.
Bitcoin surged 26% last week, its best weekly gain since April 2019, and is up nearly 40% in 10 days as turmoil in the banking sector spreads around the world — culminating, so far, in UBS Group’s takeover of rival Credit Suisse. Group AG. during the Weekend.
Traditional assets such as stocks and bank bonds fell on Monday after UBS finalized its state-backed takeover of Credit Suisse, a deal orchestrated in an effort to restore confidence in a battered sector.
Major central banks, facing the risk of rapidly losing faith in the stability of the financial system, moved on Sunday to boost liquidity flows around the world. We haven’t seen such a global response since the height of the COVID-19 pandemic.
“Its amazing rise is a result of the banking crisis, and with interest rates in the interest rate markets in the second half of 2023,” said Tony Sycamore, an analyst at IG Markets, predicting a move towards $32,000 if bitcoin continues above the level. The main support level is around $25,000.
Other market players expected bitcoin to benefit from central bank efforts to boost liquidity in the global financial system. It rose to a record high of $69,000 in November 2021 after central banks and governments launched unprecedented monetary and fiscal stimulus measures.
“The momentum is entirely driven by liquidity,” said Marcus Thelson of digital asset firm Matrixport in Singapore.
Additional reporting by Tom Wilson in London and Georgina Lee in Hong Kong; Editing by Christian Schmollinger
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