While gold prices have edged down, the price of Bitcoin stayed above US$28,000, its highest level in 10 months, for a second straight day on Wednesday, with experts predicting it might go up further if the US Federal Reserve does not raise interest rates this week.
Bitcoin prices, which have shot up by 30% since March 10 as banking woes erupted in the US and Europe, would not react much if the US central bank raised its policy rates by 0.25% as the market widely expects, Swissblock wrote in its crypto market insights report.
"But if the Fed does not lift the rate this time, it is possible that the crypto market will skyrocket like never before," noted the quantitative hedge fund that specialises in the digital assets space.
In the Swissblock Insight report, the company noted that with the financial chaos escalating since the start of this year, "Bitcoin is no longer seen as a speculative asset".
"Since the start of 2023, the price of Bitcoin has increased by over 40%, and from the previous month's low of around $20,000, the Bitcoin price has risen in tandem with the price of gold. This is an asset many people consider to be a safe haven during a crisis," it said.
"Although the situation of Bitcoin appears to be on an uptrend, some investors may wish to take profits."
MacroMicro, an economic data analytics platform, said the average cost of Bitcoin mining has increased faster than the price of the token itself over the past month. In the 30 days leading up to March 20, mining costs peaked at $33,000 per block, while the Bitcoin price was only $28,500, it said.
"The current increase in token prices may prompt miners to sell more tokens to offset their losses. With around 10% of Bitcoin tokens circulating in crypto miner reserves, selling pressure from Bitcoin node operators could lead to a significant downturn in the price of Bitcoin," it added.
Data from Glassnode, a leading blockchain intelligence firm, revealed that Bitcoin holders have been accelerating the volume of Bitcoin investments on various platforms.
Deposits of Bitcoin on various crypto platforms occurred more often than withdrawals over the last seven trading days, with the supply of Bitcoin on various platforms steadily surging from 3,895 coins on March 13 to more than 36,700 coins as of March 19.
Glassnode also cautioned that when the token deposit rate on the platform has outstripped the withdrawal volume for a long time, it could mean that Bitcoin holders have more positions for short trades and more opportunities to sell for profit.
