Bitcoin has bounced amid market turmoil

“Inflation and interest rate expectations continue to fall, a positive for risk assets such as Bitcoin. The inflation fight isn’t done, but it is moving in the right direction, and investors recognise an opportunity with Bitcoin, given the asset was so heavily depleted last year.”

Keith Parker, the UBS global and US equity strategy head, sees it as part of a broader theme with the 50 basis point fall in the 10-year US Treasury yield having a positive impact on yield sensitive assets, not just crypto. “You’ve seen gold amongst the best performing assets over the last week and a half, and gold is very sensitive to yields and real yields,” he said.

“The potential resilience in crypto can be extrapolated to those similar characteristics of sensitivity to real yields that have come down quite a bit. What we’ve [also] seen play out underneath the surface is just a massive rotation out of economically sensitive sectors, and into more defensive, and tech, and growth, sectors.”

Investors have also announced plans to raise $US100 million for a Bitcoin-focused fund focusing on fresh opportunities in the blighted sector. With scandals like FTX continuing to rock the crypto market, distressed assets are a big part of the appeal for what has been dubbed The Bitcoin Opportunity Fund.

The new fund has been looking at buying up debt belonging to publicly listed Bitcoin miners that have been trading for “pennies on the dollar,” one of the funds managing partners, James Lavish, said.

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