Bitcoin Surges Above $28,000 Amidst Banking Turmoil

Bitcoin surged to a nine-month high over the weekend as investors bought into the biggest cryptocurrency in response to turmoil in the conventional banking sector.

The token rose as high as $28,567 (£23,458) on Sunday and was trading at above $28,200 on Monday morning.

It is the first time Bitcoin has traded above $28,000 since June 2022, and follows the coin’s biggest rise in four years.

Bitcoin rose 26 percent last week, its best weekly gain since April 2019, and is up 40 percent over the past 10 days and more than 70 percent so far this year.

Inflation hedge

But the coin is still worth a fraction of its all-time high of $68,991 in November 2021, and is also far below its 52-week high of $48,202.

The current surge appears to be a reaction to the failure of several US banks earlier this month, followed by that of Credit Suisse last week.

UBS Switzerland agreed to buy Credit Suisse in a Swiss government-backed deal on Sunday, while major central banks worked together to guarantee liquidity around the world in a deal also announced on Sunday.

Some traders see Bitcoin as a hedge against inflation, in spite of last year’s evidence to the contrary, and appear to be buying into the crypto asset in expectation of further inflation spurred by the central banks’ moves to flood the financial system with cash.

Liquidity

Bitcoin’s previous all-time high in 2021 also the launch of unprecedented monetary and fiscal stimulus measures by governments and central banks.

But last year Bitcoin’s value plummeted by more than 60 percent amidst a series of bankruptcies and scandals.

Earlier this month USD Coin briefly lost its peg with the US dollar after revealing it had holdings with failed Silicon Valley Bank, while fellow ‘stablecoin’ Binance USD was shut down by New York financial authorities earlier this year.

US regulators are moving to declare more digital assets to be financial securities, subjecting them to more stringent oversight.

Meanwhile, banks have warned that investment scams relying on crypto-assets are increasingly targeting people pressed by cost-of-living issues.