Bitcoin’s price rapid recovery awakens a community in search of good news, while the authorities seek to avoid a new meltdown.
Bitcoin, the main cryptocurrency globally, has crossed the threshold of $30,000 this week for the first time since June 2022. The good performance of the asset, which has remained in a rapid upward trend this year, recovering 80% of its value so far, has not gone unnoticed among users.
The number of holders of this token has exceeded 45 million people, according to data from Santiment. This new all-time high, with 3% growth since January, is almost equivalent to the total population of countries such as Spain or Argentina.
The crypto community is hopeful that this rally marks the return of good times, after ten months of repeated crises, as well as traumatic episodes such as the ‘disappearance’ of the Terra Luna stablecoin, and the fall of the FTX empire.
Official distrust is also on the rise, being the most critical voices from Washington. At the end of March, the Commodity Futures Trading Commission (CFTC) sued Binance for offering unregistered investment assets to US clients.
Less critical are the voices from Brussels, as this month the European Parliament will finally vote on the community regulation for the crypto sector. However, the major provisions of the law would not take effect for another 12 to 18 months. At the same time, the most critical voices warn that MiCA, as the regulation is known, does not cover some market niches, such as loans in digital currencies or paid deposits.
Unchanged Foundations
The rapid recovery in the value of Bitcoin and the rest of the main currencies such as Ethereum, with a return of 62% so far this year, has two main explanations, both related to the economic context, without changes in the basic foundations.
First, the relative drop in inflation in the United States, which was limited to 5% year-on-year in March, reinforces the expectation that the Federal Reserve will decide in May what may be the last interest rate hike in the US. The long-awaited break that crypto enthusiasts dream of could be closer.
Second, the fear of a financial crisis, generated by the collapse of banks in March on both sides of the Atlantic, generated a rebound in the curiosity of many investors for other more lucrative alternatives for their savings. Despite the discussion on social networks, cryptocurrencies still do not have any type of official insurance that protects users.
Matter of faith
Isolated users repeat the mantras of the gurus that still exist, such as CZ, the owner of Binance, who shields himself from any critical comment, claiming that everything is about fear, uncertainty, or doubt (FUD).
The frenzy to break the $30,000 mark has even generated a series of headlines that were unthinkable months ago. For example, the lawyers in charge of the bankruptcy of FTX have made it public that the exchange could return to operation at some point in the near future. This caused this token to double in price after the news.
Some are also encouraged to challenge the environmental concerns against digital currencies. Challenges to the volatile history of crypto assets, are fueled again by a euphoria that can dissipate again at any moment.
By Audy Castaneda
