Analysts point out that the recent push in cryptocurrencies is explained by skepticism towards traditional banking, given all the vulnerabilities of deposit withdrawals.
While risk aversion in recent weeks may have dragged down bitcoin as market jitters returned over banking concerns and a rapidly weakening economy, bets that the Fed has finished tightening its policy have spurred the cryptocurrency.
“Many in the cryptocurrency community are now speculating that this intervention will mark a shift towards looser monetary policy that has historically led to higher bitcoin prices,” eToro analysts noted.
If the rally continues, bitcoin would need a new catalyst to break above the $30,000 level, analysts say. Although the rally may be mere speculation.
“There are several theories about the strong performance of cryptocurrencies over the past week, and frankly, most of them are more wishful thinking than logic. It seems futile to try to anticipate where the rally will peak, as previous moves often didn’t make much sense either, but still continued, although this time it looks particularly unsustainable,” said Craig Arlam, an analyst at OANDA.