Following a challenging period of downturns and fluctuations, the cryptocurrency market is now experiencing a surge in value driven by easing global macroeconomic pressures and decreasing inflation. On March 13, 2023, the total market capitalization of cryptocurrencies once again exceeded $1 trillion. As Bitcoin, Ethereum, Cardano, and Coinbase continue to soar, we explore crypto trading strategies traders can employ to profit from this rally!
Cryptocurrencies are Soaring Again: What happened?
On Tuesday (15 March 2023), the cryptocurrency market experienced a highly positive day, with several leading tokens showing significant 24-hour gains, according to reports as of just after 2 p.m. ET. While the following are just a few examples of leading names, many altcoins also recorded similar price increases.
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Furthermore, many stocks closely related to the cryptocurrency industry were also boosted by the rapidly growing crypto market. This includes the leading crypto-trading exchange Coinbase (COIN 5.88%), whose shares surged by 11.9% on Tuesday before stabilizing to a 5.9% increase by the end of the trading session.
What Caused the Crypto Market Turn Bullish?
Currently, there are numerous crypto-related matters that remain unsettled. It’s plausible that in the future, historians will document this week as a significant moment in blockchain history. If not, this week will still make it to the chapters of basic guides on crypto investments.
Below are some of Tuesday’s most significant highlights that could bring about substantial changes – in no particular sequence.
- Last week, the crypto sector was heavily impacted by a series of bank runs and banking failures as many crypto exchanges and stablecoins were in active partnerships with troubled banks. However, this week, concerns among investors have diminished significantly as regulatory bodies pledged to safeguard the account balances of the affected banks’ clients.
- The current banking crisis might cause the Federal Reserve to change its approach to combating inflation. Given the financial industry’s difficulties with increasing benchmark interest rates, the agency may opt for a higher inflation rate to reduce the likelihood of more financial institution collapses. The Federal Open Market Committee will meet on March 22 to determine the next rate adjustment.
- Recent positive activity in the cryptocurrency market indicates that many traders anticipate a smaller or potentially no increase in interest rates. This would be beneficial for the supporting players in the cryptocurrency market, as well as the digital currencies themselves.
- The Consumer Price Index report released on Tuesday morning indicated that inflation had moderately decreased in February as predicted, which may contribute to a reduction in interest rate hikes aimed at combating inflation in the upcoming week and beyond.
The momentum of cryptocurrencies that had already been building up over the weekend was further boosted by Tuesday’s jumps. Within a span of two days, Cardano registered a 17% gain, Ethereum saw an increase of 18%, and Bitcoin surged by 23%.
The crypto market defies the odds amid a global market downturn!
It is too early to determine the full extent of the potential consequences of (Silicon Valley Bank) SVB collapse. While stablecoins such as USD Coin and Dai briefly lost their dollar pegs, they have since recovered. Despite the Silvergate Bank scandal, the impact on the cryptocurrency industry is expected to be temporary.
Compared to the FTX bankruptcy in November 2022, the failure of the San Diego-based bank should have a lesser impact. The aftermath of the liquidation may offer important lessons about risk management principles like diversification. However, there is a concern that some traditional banks may now become more reluctant to accept crypto accounts, leading to increased costs for U.S. crypto companies as their banking options become more limited.
Crypto Markets On A Road to Recovery?
The recovery from the setbacks of 2022 is still incomplete. Ethereum is currently trading at the same prices as last August, and Bitcoin has rebounded to levels it previously dropped below in June. Coinbase and Cardano have only managed to regain last week’s price levels. However, it is still a long way for all these tokens to reach new all-time highs again.
While the Fed’s upcoming interest rate increase or non-increase could potentially fuel the crypto market, it’s likely that a more significant response would require progress in establishing a more robust regulatory framework and the development of user-friendly crypto financial services and applications.
Despite these developments, they may not be enough to trigger a significant surge in the crypto market. It could be considered a dress rehearsal or a false signal before the next dip. The future of crypto remains uncertain, so investors should be prepared for volatility in this sector.
Learn How Crypto Traders Can Weather A Bear Market in great detail!
USDC Stablecoin Regains Dollar Peg!
USDC’s value dropped significantly at times, reaching as low as 86 cents, which was a remarkable decline for the second largest stablecoin worldwide. However, it showed some signs of improvement by midday on Saturday.
As per CoinGecko, USDC stablecoin managed to restore its value back to the US dollar, which had fallen below the expected $1 mark. Furthermore, banking and finance regulators announced on Sunday that all depositors of Silicon Valley Bank would be reimbursed and allowed to access their funds by Monday.
Circle provided investors with assurance that in the event that it fails to recover the entire $3.3 billion, it will utilize its corporate funds to make up for any shortfall. This announcement helped Circle to recover to 97 cents after several prominent crypto exchanges had suspended or paused USDC-related transactions. Coinbase, the largest exchange in the U.S., halted conversions from USDC to U.S. dollars on Friday, while Binance, the world’s largest exchange, revealed on Saturday that it would resume trading certain USDC trading pairs that had previously been suspended.
Is Bitcoin a Safe-Haven Asset Now?
Bitcoin has been a widely discussed subject in the financial sector for years, generating divergent views ranging from considering it a “groundbreaking new form of asset” to a “hazardous speculative bubble.” The currency’s fluctuating nature has historically rendered it an unsteady option for a secure investment. However, recent market trends have appeared to alter that stance, leading to a shift in perception toward Bitcoin. These days, cryptocurrency is attracting more positive evaluations and upbeat tones, with fewer negative opinions.
Can Bitcoin serve as a long-term wealth vault?
Bitcoin’s value has been skyrocketing since the beginning of 2023, increasing by 45% since the start of the year. In contrast, the S&P 500 index has only risen by a modest 0.8% during the same period, while gold has gained 2.6%.
Looking at the last three years, Bitcoin has once again outperformed traditional safe havens such as gold and broad stock market indexes. During this period, gold has risen by 19%, while the S&P 500’s dividend-adjusted total return has been limited to 49%. In comparison, Bitcoin has surged by an impressive 367%.
Although past performance is not always a reliable indicator of future results, it appears that Bitcoin has cemented its position as a contender in the safe-haven asset category. Investors are increasingly searching for alternatives to traditional value stores such as precious metals or diverse stock market indexes.
Due to its unique characteristics and limited supply, Bitcoin could emerge as an attractive option for those looking to safeguard their wealth against inflation and currency fluctuations. Here’s how Bitcoin Traders can benefit from sky-high volatility in the short term.
What Experts Say?
Although Bitcoin’s volatility is a well-known characteristic, certain market experts remain convinced that it could continue to function as a secure asset in the future. In addition to the traditional supply-and-demand dynamic that is reminiscent of gold, some Bitcoin experts suggest that its growing acceptance by institutional investors and major corporations may be making it a more mainstream asset class.
To reinforce their confidence in the cryptocurrency, companies such as Tesla and Block have added Bitcoin to their balance sheets. Business software creator MicroStrategy has taken this concept to the next level by converting the majority of its cash reserves into Bitcoin and is continuing to purchase more coins using a mix of cash flows, loans, and stock sales.
Explore Gold vs Crypto Trading: Which One Is Worth Your Trade?
What Should Crypto Traders Do In Crypto Rally?
The positive momentum seen in the world of cryptocurrencies has the potential to attract not only retail traders but also high-net-worth individuals, institutional investors, and corporates who are interested in capitalizing on the exciting short-term trading opportunities that are available. However, it is essential to exercise caution and adhere to certain basic principles while investing during a crypto market rally. These principles include:
- Diversifying your investment portfolio by investing in a variety of assets
- Spreading your risk to mitigate the impact of any potential downturn in a particular crypto
- Staying up-to-date with industry developments by conducting research
- Avoiding impulsive decisions that are driven by hype
- Adhering to a disciplined investment strategy, and
- Prioritizing security by storing one’s crypto assets in secure wallets with proper backups and security protocols in place.
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Why is crypto rising again?
The complete impact of the collapse of Silicon Valley Bank (SVB) cannot be determined at this early stage. Although stablecoins such as USD Coin and Dai experienced a brief loss of their dollar pegs, they have since regained stability. Despite the scandal surrounding Silvergate Bank, any effect on the cryptocurrency industry is predicted to be temporary.
Will Bitcoin Rise Again?
Bitcoin has been experiencing an upward trend in value since the start of 2023, with a 45% increase so far this year. In contrast, the S&P 500 index has only shown a modest 0.8% rise during the same period, while gold has gained 2.6%. The performance of Bitcoin in the past three years has once again been superior to conventional safe investments like gold and stock market indexes.
What is the safest cryptocurrency?
Bitcoin is the most recognized cryptocurrency due to the massive amount of computing power used, Bitcoin offers network security, decentralization, which reduces the possibility of manipulation and censorship, high liquidity, and strong brand recognition and trust among investors and general users.
What is the future of Bitcoin 2023?
Despite Bitcoin’s volatility, experts see it as a secure asset in the future due to its similarity to gold’s supply-and-demand dynamic and growing acceptance by institutions and major corporations. Tesla, Block, and MicroStrategy have added Bitcoin to their balance sheets, with MicroStrategy converting most of its cash reserves to Bitcoin.
What are the top 5 cryptos for 2023?
Tether (USDT) …
Binance Coin (BNB)
U.S. Dollar Coin (USDC)