Bitcoin – along with several other leading digital currencies like Ethereum, Cardano, and Solana – rose quite a bit in recent weeks and was trading for just over $24,000. Many analysts assumed that $25,000 was right around the corner.
Bitcoin Has Jumped a Few Thousand Bucks
There appear to be several reasons as to why bitcoin suddenly surged, a big one being that recession fears are starting to dwindle. There have been several worries permeating the financial space as of late that 2008 is likely to occur all over again given the present state of the economy. Inflation is at a 40-year high, and things like food and gas prices are jumping like they never have before. For these reasons, many were concerned the economies of super nations like the U.S. were on the verge of collapsing.
In addition, the U.S. has now had two individual and consecutive periods of GDP contraction, which is usually a big indicator that a recession is coming. However, many analysts believe that the Fed is likely to continue hiking interest rates in the coming months as a means of combating inflation and other economic issues. For this reason, they believe that a recession could be avoided, though it may mean that Americans will wind up paying high prices for some time.
Alex Kuptsikevich – a senior analyst at FX Pro – commented in a recent interview:
The current economic data indicates that the state’s tightening of monetary policy has already moved into a cooling-off phase and has returned to its long-term GDP growth trend. With such input data, the chances increase that the Fed will soon slow down sharply the pace of rate hikes and could move to policy easing rather quickly. It is worth remembering that in 2018 the Fed raised its rate to 2.5 percent, which caused markets to collapse and forced the regulator to move to policy easing soon afterward.
Bitcoin has experienced heavily bearish trends in recent weeks. The asset rose to a new all-time high of approximately $68,000 per unit just nine months ago, though now the asset is struggling to maintain a position in the low to mid-$20K range. Ben Small – an analyst at the U.K.-based digital asset broker Global Block – explained:
Eyes will now be turning towards any economic data that could conflict with the Fed’s targets. Not only does the Federal Open Market Committee have to be willing to seriously harm growth prospects in the states, but also come to terms with the realities of a looming recession and a jobs market under serious pressure.
A Store of Value?
Alex Adelman – chief executive of bitcoin rewards program Lolli – also threw his two cents in, saying:
During times of market volatility, bitcoin is gradually and increasingly being recognized by the market as a secure store of value and source of stability.
Source: https://www.livebitcoinnews.com/bitcoin-jumps-following-easing-of-recession-fears/