The ongoing turmoil in the U.S. banking sector has left investors searching for stability, and they appear to have found it in two unlikely allies: Bitcoin (BTC) and gold. As regional bank stocks continue to struggle, both Bitcoin and gold have experienced significant gains, with...
The ongoing turmoil in the U.S. banking sector has left investors searching for stability, and they appear to have found it in two unlikely allies: Bitcoin (BTC) and gold.
As regional bank stocks continue to struggle, both Bitcoin and gold have experienced significant gains, with gold reaching new all-time highs and Bitcoin’s market dominance surging to 49%.
BTC/USD rebounded sharply, hitting $29,242 on Bitstamp as the Federal Reserve announced a 0.25% interest rate hike.
This increase in Bitcoin’s value coincides with the decline of several U.S. regional bank stocks and growing concerns about the country’s banking system.
Gold’s all-time high and Bitcoin’s resurgence signal their strengthening appeal as safe havens during these uncertain times.
Bitcoin’s dominance rate, which measures the cryptocurrency’s share in the broader market, has risen sharply since the onset of the U.S. banking sector instability nearly two months ago6.
Lewis Harland, Portfolio Manager at Decentral Park Capital, highlights Bitcoin’s increasing market dominance amidst the banking sector’s instability and the slide in banking stocks as evidence of the cryptocurrency’s strengthening appeal as an anti-U.S. dollar play or bet on dollar weakness, just like gold and oil.
“You see outperformance of BTC within the crypto market when regional bank share prices collapse. This signals that BTC is the high-quality anti-dollar liquid play for investors as the crisis unfolds further”, said Harland.
Gold’s all-time high is a testament to the increasing demand for alternative assets in the face of an uncertain financial landscape.
Similarly, Bitcoin’s growing dominance rate is now challenging the upper end of its multi-year range.
According to Harland, a breakout would mean continued BTC outperformance.
“Bitcoin dominance is looking to break its 3-year oscillation pattern,” Harland said. “A break of 50% would likely signal a new market regime of prolonged BTC outperformance within the market”.