Bitcoin reaches new high of over $28,000, but is it a reliable alternative to traditional banking?

Bombolo | News and Media

Bitcoin reaches new high of over $28,000, but is it a reliable alternative to traditional banking? Bombolo | News and Media

Bitcoin experienced a surge on Monday, reaching its highest level in nine months. Some investors turned to the cryptocurrency as a potential safe haven amidst the current turbulence affecting the global banking system.

On Monday morning, Bitcoin reached a peak of $28,414 and remained around $28,000 by 5 pm ET. In the past week alone, the largest cryptocurrency has seen a surge of over 15%, and since the start of January, it has risen by 69%. Bitcoin's highest ever value was $69,000, which it reached in November 2021, while its lowest point was $15,649 in November 2022.

Analysts and investors believe that the current turbulent environment is favorable for risk assets, which is causing the coin to gain momentum. This sentiment is partly due to the recent closure of three U.S. banks and the takeover of Swiss bank Credit Suisse by its larger competitor UBS. Additionally, there is uncertainty surrounding this week's Federal Reserve decision regarding interest rates. On Sunday, the Fed announced that it would increase the frequency of lending USD swaps to other central banks, indicating a growing demand for dollars. All of these factors are contributing to the coin's rise in value.

With a market share of 47.7% of the $1.17 trillion cryptocurrency market, Bitcoin remains the largest digital asset in the world. This is the highest proportion of total value that Bitcoin has represented in digital assets since June 10, 2022.

Sean Farrell, the head of digital assets with Fundstrat, suggests that some investors are starting to view Bitcoin as a safe haven asset, similar to gold, especially during times of high inflation. Data from Fundstrat shows that the 30-day rolling correlation between Bitcoin and gold is increasing, while the correlation between Bitcoin and the Nasdaq is decreasing.