The drop of some american banks and Swiss made many savers switch from traditional investment to cryptocurrencieswhich led these to values that had not been seen for many months.
According to the newspaper El País of Uruguay, there are good omens for the cryptos in 2024, since after the “hard streak” last year, everything indicates that they will raise their heads strongly. “Last year was bad for the usual cycle of the sector of four yearsand also due to some impact events such as the bankruptcy of the FTX cryptocurrency platform (it left debts of almost US$3.1 billion to its 50 creditors), but now the industry has been cleaned up after purging and growth will be more solid,” he said Martin Benitez AramendiaVice President of the Uruguayan Chamber of Fintech, in an exclusive event.
The country manager of Ripio Uruguay (one of the largest crypto exchanges in the region) also pointed out that in 2014 there was a brutal drop in the value of cryptocurrencies, which reached 80%, but that many people continued to invest in this technology assuming that cycles exist, and lately many developers have emerged in this industry. “That’s why the next growth cycle, which will start in 2024, will be big,” he reaffirmed.
The truth is that people have learned the holding company and no longer panic or mistrust this relatively new sector, or its falls. The hold consists precisely in buying cryptocurrencies and holding them without selling them for a long period of time, regardless of market fluctuations.
This learning of the market helps the growth of the industry, which expects that by the year 2029 the 90% of the population that handles money in the world makes use of cryptocurrencies just as today it does with physical money.
This does not mean that there are fewer risks of loss of investment value (due to the high volatility in the price of cryptos, fraud, or the fact that they do not have the backing of a central bank) as this will continue. exist, but people do have more knowledge about how to deal with these variables, and in the world these currencies are being more accepted, concluded the Uruguayan morning paper.
After the banking crisis, Bitcoin reached values that it had not reached for several months
What are the reasons for this rise?
Since the closure of Silicon Valley Bank was announced on March 10, Bitcoin has risen more than 30% and has recovered levels not seen since 2022. A rise that may be due, experts say, to several causes:
The first, the injection made by the Fed and the US Treasury to Silicon Valley Bank to avoid a systemic crisis in an environment in which investors continue to perceive the prospect of a scenario of lower rates as an incentive to bet on these cryptocurrencies. in a particularly hectic banking context and with fear of contagion everywhere.
And finally, there are those who say that behind the momentum of the main cryptocurrencies is the fact that operators have carried out large hedging operations in the face of a foreseeable imminent fall in price when the price was around US$20,000 and the rise could be due to a short closing.
Morgan Stanley has ensured that this should be the time to “shine” cryptocurrency as concerns grow for traditional banks, especially considering that Bitcoin was intended as a way for people to hold value in a private digital wallet without the need to have to resort to an intermediary to store it for them or to allow you to carry out transactions.
In practice, “bitcoin is not isolated from the traditional banking system” as its price is supported by “bank liquidity in dollars, making it function as a speculative asset rather than a currency,” the report said. In his opinion, the rebound this week was driven by a small number of market participants and that it was likely helped by the short squeeze rather than a “significant change in trading dynamics,” the report added. (A short squeeze occurs when an asset rises in price and short investors are forced to cover their positions at a loss.)
Regardless of the reasons behind this rise, which has already accumulated more than 57% since the beginning of the year, it is still far from the levels reached in 2022 when levels of even $100,000 were expected as a target for the cryptocurrency. The increases in interest rates initiated by the central banks affected financial assets and, with special force, Bitcoin. And it is that, contrary to the original idea, Bitcoin has a positive correlation with risky assets.
“In general, a streak of bitcoin dominance is considered a healthy factor for the cryptocurrency market, as it indicates that conditions in the market are relatively low (cryptocurrency traders are choosing to buy bitcoin over other more altcoins). speculative,” FundStrat Research said in a tweet on Tuesday. FundStrat said the rally could reflect that investor interest in bitcoin “is rekindling just as traditional banks like SVB are failing.”
