The price of bitcoin bucked market trends and surged Thursday as investors flooded back into cryptocurrency markets.
Recovering all of its losses in the last week, bitcoin surged to a high of $6,342.03 at 2 p.m. EDT before softening slightly to $6,197.58 at 10:30 p.m., up almost 16% over the last 24 hours. Bitcoin had previously bottomed to just below $4,000 March 12 and had traded in a band mostly between $4,800 and $5,400 during the past week.
The reasons behind the price increase are open to speculation, but one theory stands out: Bitcoin is being seen as a safe haven again. Coindesk reported that the surge may be directly related to a “global dash for dollars” seen in foreign exchange markets.
The U.S. dollar has surged on global markets over the last few days as investors shift out of other currencies on fears of a coronavirus-led recession in the global economy. Added to that are central banks cutting interest rates and launching quantitative easing programs that are also devaluing other currencies.
Bitcoin could now be seen as a safe-haven option alongside the U.S. dollar, a long-held theory that hasn’t held so far during the chaos caused by the coronavirus pandemic. Bitcoin isn’t subject to interest rate cuts and money printing programs, making it at the very least an attractive alternative.
Catherine Coley, chief executive officer of Binance.US, agrees with the safe-haven theory. “Last week’s nosedive in crypto markets was part of a universal rush to cash among investors in response to unprecedented panic and uncertainty, Coley told Forbes. “But Bitcoin’s appeal as a safe-haven and deflationary asset is once more apparent amid the raft of fiscal and monetary stimulus from governments and central banks around the world, reminding investors just how precarious the existing financial system really is.”
Bitcoin is not alone in the cryptocurrency market, as other tokens and coins are also surging after suffering similar losses to bitcoin over the last week. Ethereum is up 14% at 10:30 p.m. EDT, Ripple’s XRP up 9%, Bitcoin Cash 19% and Bitcoin SV 26%. The notable exception among the top 10 cryptocurrencies was the U.S. dollar-linked Tether stablecoin, which fell 2.3%.
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