Bitcoin is rallying due to interest rate forecasts, says Coinjournal’s Dan Ashmore

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Key takeaways

Bitcoin is buying and selling above the $28k degree for the primary time since June 2022.
Coinjournal’s Dan Ashmore believes that the interest rate forecasts are accountable for the continuing rally by Bitcoin and different cryptocurrencies.
Many out there nonetheless take into account the latest banking disaster as the explanation why traders are coming into the crypto market.

Interest rate forecasts behind Bitcoin’s rally

Bitcoin, the world’s largest cryptocurrency by market cap, has been performing excellently over the previous few weeks. At press time, the price of Bitcoin stands at $28,411, up by 13% over the past seven days.

Many within the crypto house attribute the continuing crypto rally to the collapse of some banks, together with Signature Bank, Silvergate Bank, and Silicon Valley Bank.

However, throughout an interview with CNBC, Coinjournal’s Dan Ashmore identified that Bitcoin’s rally has to do with the interest rate forecasts reasonably than the latest banking disaster.

Lot of chatter about what is driving this huge Bitcoin rally.

Spoke with @CNBC final night time about whether or not it is stemming from interest rate forecasts or if traders are betting on Bitcoin as a substitute to the banking turmoil👇 pic.twitter.com/o45zOOPiiw

— Dan Ashmore (@DanniiAshmore) March 21, 2023

Regarding the continuing rally, Ashmore mentioned;

“It is a reaction to the complete flip in interest rate forecasts in the wider economy. If you go back to before the Silicon Valley Bank collapse, there was an 83% probability that the interest rate would be increased by 100 basis points by the summer. Today, when we look at that, it is completely the opposite, and there is almost 100% of rate cuts.”

He added that the crypto market is reacting to the likelihood that the Fed’s latest interest rate hikes are coming to an finish.

Interest rate reduce is music to crypto traders

With Bitcoin buying and selling at $28k per coin, traders can be optimistic that costs may soar increased over the approaching days and weeks.

According to Ashmore, cryptocurrencies commerce as risk-on belongings, and an interest rate reduce is music to the ears of crypto traders.

Ashmore additionally mentioned the correlation between cryptocurrencies and tech shares. According to the Coinjournal analyst, whereas many count on crypto to be an impartial hedge, the belongings nonetheless very a lot correlate with the inventory market, particularly tech shares. He concluded that

“The NASDAQ index rises, Bitcoin’s price also rises. The NASDAQ falls, and Bitcoin also falls a little more. The last couple of weeks have been interesting as Bitcoin has outperformed the NASDAQ. But it is a reflection of the fact that Bitcoin is trading in correlation with the interest rate forecasts.”