Bitcoin pushed its way back toward $30,000, extending a recent period of turbulence around the closely watched round-number level.
On Thursday, Bitcoin had surged as much as 7.3% but quickly erased the move and fell into the red, leaving investors scratching their heads — as is often the case with swings in crypto prices. The retreat sparked a litany of speculation. The theories included the suggestion that a well-known trading firm was dumping Bitcoin and that the US government was selling the cryptocurrency. Another claim was that tokens connected to the Mt. Gox collapse may finally be reintroduced into the market.
Bitcoin, on track for its fourth straight monthly gain, has rebounded 75% in 2023 from last year’s rout, weathering a US crypto crackdown and the long shadow of FTX’s failure. Expectations that the Federal Reserve will eventually pivot to lowering interest rates have helped to breathe life into digital-asset markets.
Some market watchers pegged Wednesday’s early pop to the notion that the token is viewed as a hedge for US banking angst, which flared again around First Republic Bank. The hedge argument is based on the contention that Bitcoin embodies an alternative to the fiat-based banking sector.
Bitcoin “is a risk asset, but it is also more than that,” wrote Noelle Acheson, author of the “Crypto Is Macro Now” newsletter. “It is also an ‘insurance’ asset, and as such is an intriguing banking strain play: one of the only assets that can straddle both narratives.”