‘Psychological magnet’: Bitcoin rallies past $US30,000 mark

Bitcoin climbed above $US30,000 for the first time since June, bolstered by bets on easier monetary policies that have made cryptocurrencies standout performers this year.

Bitcoin is now up 82 per cent since December 31, handily beating the tech-heavy Nasdaq 100’s 19 per cent gain. Gold, another investor favourite this year, has climbed around 10 per cent.

Crypto’s rapid ascent has seen Bitcoin vault past where it stood when hedge fund Three Arrows Capital imploded last summer — yet it remains more than 50 per cent below its all-time high in November 2021.

“30K is obviously a psychological magnet now,” said David Brickell, director of sales at Paradigm. “The bigger question is why is [Bitcoin] not higher,” he said, adding that the coin looks to be ready to “take the next leg higher.”

Underpinning Bitcoin’s partial comeback are expectations that the banking crisis that erupted in the US in March will force the Federal Reserve to hit pause on rate increases. That’s boosted the view among Bitcoin bulls that the token stands to gain from lower real interest rates, and that it offers shelter from turmoil in traditional finance.

“This rally may, in part, be driven by the expectation that rate hikes are almost done, but some groups of investors are drawn to crypto because it’s an asset outside of traditional banking and finance,” said Bradley Duke, co-chief executive officer of crypto exchange-traded product provider ETC Group.

Digital assets over the past two sessions broke out of weeks of range-bound trading, with analysts also citing technical factors as having given the token a nudge. But hanging over the rally is persistently low liquidity, which bears say distorts pricing and could cause a rapid reversal should central banks stand firm on battling inflation.

“The return is there, so it’s still attractive if you’re trying to generate 20 per cent, 30 per cent, even something higher if you’re willing to hold the coins for longer,” said Brandon Mulvihill, CEO at Crossover, a cryptocurrency trading venue for institutional investors.