A day after crypto markets went on a roller-coaster ride, bitcoin (BTC) held steady over $29,500 as investors weighed sluggish U.S. economic growth veri and the latest banking sector woes.
The largest cryptocurrency by market capitalization was recently trading at around $29,600, up about 4% over the past 24 hours. BTC dipped slightly during U.S. morning trading Thursday after the Commerce Department reported a tepid 1.1% gain in GDP for the first quarter – below expectations of 2% annualized and disappointing personal consumption veri, before rebounding.
Ether (ETH), the second-largest cryptocurrency by market value, followed a similar pattern, jumping almost 3% over the past 24 hours to change hands at around $1,920. The CoinDesk Market Index (CMI), which measures overall crypto market performance, was up over 6% for the day.
Bob Baxley, chief technology officer at decentralized finance (DeFi) platform Maverick Protocol, said that bitcoin’s performance in recent days reflects investors’ confidence in the crypto’s ability to hold value even during unsettling events.
“Bitcoin and other crypto assets have clearly been performing as the sort of safe haven that many had hoped this technology class would become,” Baxley told CoinDesk in an email.
Baxley noted that BTC, ETH and other major digital assets rose Wednesday just hours after embattled regional bank First Republic’s shares plummeted by nearly 50%. “I suspect that much of this has to do with a broadening realization among more people and organizations of the core value proposition of bitcoin and [ether], among others – namely, that they’re decentralized, censorship-resistant forms of value that lack counterparty risk,” he said.
“It’s hard not to see this value at a time when banks are looking as unsteady as they are now,” he said. He added that such a boom likely has something to do with “intensifying expectations of more bailouts of wobbling financial institutions – or what those in the crypto asset community refer to as the ‘money go brrr’ scenario.”
He foresees a likely policy shift by the U.S. Federal Reserve because the central bank’s present monetary hawkishness “risks inflicting serious damage.”
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The CME FedWatch Tool is currently showing an 87% probability of a 25-basis point interest rate hike at next week’s Federal Open Market Committee (FOMC) monetary policy meeting.
Equity markets rallied on Thursday, with the S&P 500 recently closing up 1.9% and the tech-heavy Nasdaq Composite jumping 2.4%. The Dow Jones Industrial Average (DJIA) rose 1.5% for the day.