Bitcoin (BTC) rallied on Tuesday as fears about stability in the US financial system resurfaced, boosting crypto prices.
The world's largest crypto currency gained approximately 2.30% during the day, reaching over $28,800.
"Continuing Stress in the Banking Industry Has Benefited Bitcoin"
“The continued stress associated with vulnerabilities in the banking sector has helped put a positive emphasis on the value promise of having self-storage decentralized currencies,” said Joel Kruger, market strategist at LMAX Group.
“We are seeing a wave of broad-based weakness in the US dollar in anticipation of a less hawkish statement at the Fed's upcoming meeting,” Kruger said.
“This caused bond yield spreads to turn against the dollar, which perhaps helped support crypto assets.”
Possible declines in interest rates will bolster risky assets including Bitcoin, which is fueling some of the recent gains in crypto. But Noelle Acheson, author of the "Crypto Is Macro Now" newsletter, cautioned against expectations for rate cuts in the short term:
“Reducing inflation should remain a priority as long as the market can stand it. We are seeing an increase in risk assets, but that may not last long, a lot depends on the employment data to be released next Friday.”
*Not investment advice.