Bitcoin has seen a historic rally this quarter, and some analysts speculate it’s about to get closer to historic highs.
- With the first quarter ending next week, Bitcoin’s valuation has increased 41.6% since January 1, marking the currency’s largest quarterly rally since 2021.
- Bitcoin’s worth peaked on Wednesday afternoon above $28,700 per token, below its November 2021 peak above $65,000 but well above where it stood at the beginning of the year, around $16,600.
- Valuation dipped on March 9, tied to the collapse of crypto-friendly Silvergate Bank, but has rallied 29.3% in the two weeks since its low point on March 10.
- Investors like ARK Invest CEO Cathie Wood argue that the token hedges against the current banking industry’s woes and instability.
Why It’s Important
Part of Bitcoin’s central appeal is that it isn’t tied to the issues associated with central banking, so it isn’t necessarily affected by market headwinds. As the rest of the economy faces inflation and tightening from the Federal Reserve, Bitcoin has correspondingly gained value. This could make the token more appealing to investors. As Wood notes, “The behavior of the price through this crisis is going to attract more institutions.”
“With interest-rate markets gone from pricing in rate hikes to pricing in rate cuts, there is now a gentle tailwind supporting Bitcoin,” says market analyst Tony Sycamore.
Analysts are predicting that the price could reach between $32,000 and $35,000 in the coming months, and Wood continues to predict that the tokens will be worth $1 million within seven years. As Bloomberg notes, the DeMARK Sequential indicator study suggests that Bitcoin’s momentum will see a “long-term breakout.”
Stansberry Research analyst Matt McCall offers a less bullish view of the rally, noting that the current volatile market has made both crypto and banks unstable and given a brief opportunity for crypto to hedge against market trends. He encourages exposure for both traditional investments and cryptocurrency.
“In time, I expect the banking system will be just fine. What we’re seeing now is likely a temporary situation. But because the government is fully backing the banking industry right now, skeptical investors are moving their money into cryptos. And that’s creating an opportunity,” says McCall.