The growth of Bitcoin’s value in the first quarter of 2023 compared to other major assets on the market, including gold and Nasdaq, shows its best two-year performance.
One market observer says the low depth of Bitcoin buy wall orders is the main reason for the increase in the price of this cryptocurrency. Of course, others believe that the Federal Reserve’s affairs and the not-so-great situation of major banks around the world, and even the collapse of some of the largest banks, have led to a decrease in people’s trust in fiat money and their attraction to other markets. Financial such as cryptocurrencies.
Although 2022 was very disappointing for Bitcoin and the cryptocurrency market as a whole, and we saw a sharp decline in the value of these digital assets, but with the beginning of 2023, a new life has been breathed into this market and we have seen very good growth in this area since the beginning of this year.
Data from CoinDesk shows that the market value of the king of cryptocurrencies has improved by about 72 in 2023, which is the best three-month performance in the past two years. This trend has pushed the market value of Bitcoin to $ 542 billion.
Three months ago, some experts had examined the possibility of Bitcoin’s price dropping to $12,000, as this cryptocurrency had a significant decrease of 76% from November 2021 to the end of 2022.
Bitcoin’s recent significant growth has placed it ahead of the second-largest digital currency, Ethereum (ETH), in terms of market value. In comparison, Ethereum’s growth in the first three months of 2023 reaches about 50%. In the same period, gold experienced a 7% growth, and the Nasdaq index also increased by 15%.
One of the most important reasons for the recent jump in Bitcoin and other assets’ prices is that central banks, led by the Federal Reserve, are said to be sidelined in response to signs of record economic activity around the world and their increasing aggressive rates.
The Federal Reserve’s expectations were bolstered earlier this month following the collapse of three major US banks and the implementation of emergency financing programs by the country’s central bank to curb banking panic. The balance sheet of the US central bank has recently grown by $300 billion, which has helped to neutralize a very small portion of existing inflation over the past few months.
Considering future transactions of Federal funds, traders have now realized that the Federal Reserve will begin its facilitation cycle by reducing interest rates by one-quarter of a percent in June.
Martin Lay, Product Strategist at MarketVector Indexes digital asset market, told CoinDesk in an interview: ‘Everything relies on expectations of new easing actions by central banks, especially the Federal Reserve. Bitcoin is known as the most sensitive asset to liquidity fluctuations among all high-risk assets.’