Bitcoin, the largest cryptocurrency by market capitalization, has held its ground above $29,000 throughout U.S. trading hours on Thursday, showing resilience in the face of renewed banking unrest and slowing U.S. economic growth. Despite concerns about recent setbacks, including mass liquidation of short and long positions and unfounded rumours of bitcoin sales by the U.S. government and failed exchange Mt. Gox, bitcoin and other cryptos have been resistant to industry mishaps and macroeconomic uncertainty.
According to Michael Sonnenshein, CEO of crypto asset management company Grayscale Investments, this resilience is an encouraging sign. He said, “Despite recent setbacks, what we’re seeing is resilience. As this industry gets challenged, it demonstrates its strengths and comes out stronger.” Sonnenshein’s comments came on the opening day of the Consensus 2023 conference in Austin, Texas, where Grayscale and CoinDesk, the company behind CoinDesk TV, share the same parent company, Digital Currency Group.
Other major cryptocurrencies were also up marginally after falling well into the red in the past 36 hours. Ether, for example, was recently trading above $1,910, up about 0.8% from Wednesday.
Meanwhile, U.S. equity markets rose, buoyed by surprisingly strong earnings from tech giants Microsoft, Google, and Meta, despite concerns about unexpectedly sluggish 1.1% growth in first-quarter GDP and the struggles of regional bank First Republic. The Nasdaq Composite and S&P 500 climbed 2.4% and 2%, respectively, as investors focused on next week’s Federal Open Market Committee (FOMC) interest rate decision.
The CME FedWatch Tool is currently showing an 87% probability of a third consecutive 25-basis point rate hike, but Edward Moya, the senior market analyst for foreign exchange market maker Oanda, wrote in an email that the U.S. central bank is close to ending this type of monetary hawkishness. Moya believes that the Fed will be able to move forward with one, perhaps two more rate hikes, but then that should be it. He added, “Today’s economic data painted a picture of an economy that is slowing down, inflation is temporarily accelerating, and the labour market is softening.”
In conclusion, while concerns about renewed banking unrest and slowing U.S. economic growth persist, bitcoin and other cryptocurrencies have shown resilience and continue to hold their ground. As the industry faces challenges, it demonstrates its strengths and comes out stronger. Investors will now be focusing on next week’s FOMC interest rate decision and its potential impact on the market.