The recent week has seen gains in Bitcoin and other leading non-stablecoin cryptocurrencies amidst banking turmoil and inflation concerns. Investors seeking to diversify their portfolios have been flocking to Bitcoin and similar assets as a diversification strategy and an inflation hedge. This article will explore the recent gains in Bitcoin and other leading cryptocurrencies, the reasons behind the increased interest in cryptocurrencies, and upcoming events and data releases in the financial world.
Bitcoin and Other Cryptocurrencies Experience Gains
According to CoinMarketCap data, Bitcoin rose 1.69% to $28,026 in the 24 hours up to 9:00 a.m. in Hong Kong, adding 0.37% for the week. Litecoin was the highest gainer, rising 1.85% to $93.57, and up 12.39% for the week. Ether also rose 1.61% to $1,780, marking a weekly gain of 0.16%.
Diversification and Inflation Hedge
Investors have been flocking to Bitcoin and similar assets as a diversification strategy and an inflation hedge amidst bank failures and murmurs of hyperinflation. Maxwell Goldstein, co-founder of on-chain fine art investment platform Freeport, noted that Bitcoin fits the bill as a safe-haven asset in this scenario.
NFT Market Declines
In the non-fungible token (NFT) market, the Forkast 500 NFT index dropped 1.52% in the past 24 hours to 4,024.34, moving down 2.66% for the week. The index serves as a proxy measure of the performance of the global NFT market and includes 500 eligible smart contracts on any given day.
Bank Worries Persist
Despite the gains, bank worries remain. Deutsche Bank, the largest lender in Germany, saw the cost of its default insurance jump on Friday, triggering an 8% sell-off in its stock. The Financial Stability Oversight Council in the U.S. assured investors that the banking system is sound and resilient, despite some institutions coming under stress.
Upcoming Events and Data Releases
Looking ahead, the U.S. Congress is set to hold a hearing on Silicon Valley Bank and Signature Bank on Wednesday, which both failed this month, and data releases are expected on U.S. inflation and GDP growth. The Federal Reserve is scheduled to meet on May 3 to decide on its next move on interest rates to tackle inflation. Analysts at the CME Group predict an 83.2% chance the Fed will keep rates at 4.75% to 5%, with a 16.8% chance of another 25-basis-point hike. The Fed's current projection of the terminal interest rate in 2023 is 5.1%, indicating that one more rate hike in 2023 could bring the Fed's tightening cycle to an end.
Conclusion
The recent banking turmoil and inflation concerns have led to increased interest in cryptocurrencies such as Bitcoin as a safe-haven asset. While bank failures have caused some concern, officials have reassured investors that the financial system remains sound and resilient. As always, investors should proceed with caution and do their due diligence before making any investment decisions.
