Bitcoin hit $28,554.07, its highest level in nine months

Bitcoin jumped past the $28,000 mark over the weekend as investors rediscover its appeal as an alternative banking system.

On Monday, the crypto currency had dropped a bit. Bitcoin dropped over 2 per cent to $27,705.23, as per Coin Metrics. Earlier during the day, it hit $28,554.07, its highest level in nine months. In the meantime, ether dropped 3.5 per cent to $1,765.60.

The weekend rally in bitcoin came amid continued turmoil in the global banking sector. On Sunday, UBS agreed to buy Credit Suisse for 3 billion Swiss francs ($3.2 billion) in a deal partly brokered by the Swiss regulators looking to stem contagion.

Bitcoin continues to trade like a leading risk-on asset, like it has for the last two years, according to James Lavish, managing partner at the Bitcoin Opportunity Fund. The rescue of Credit Suisse has put out a large credit fire, this encourages bitcoin purchasers who are now expecting the Fed slowing the rise in rates and hinting a coming halt this week.

As of Monday afternoon, there is nearly a 72 per cent chance of a quarter-point drop by the Fed, as per CME Group’s FedWatch tool. The other 28 per cent expectations are there will be no rise and that Chairman Jerome Powell may begin to ease his aggressive tightening because of the emerging financial contagion.

Bitcoin is coming off its best week since January 2021, which was right before the first bull run that year, while ether just posted its best weekly gain since August last year. The two are up for the year by 67 per cent and 46 per cent, respectively.

Supporters of bitcoin have frequently dubbed it “digital gold” referring to it as a store of value, especially during times of global turmoil, and one that is uncorrelated with other asset classes.

At present, there are signals bitcoin’s price movement is starting to decouple from stocks, for now. The crypto currency’s correlation with the S&P 500 is now at its lowest since September last year, after reaching its highest in 2022, as per Coin Metrics.