Technology

In this article

Bitcoin is up 50% so far in 2023, beating major commodities and stock indexes. Industry insiders said the bank collapses have sent investors looking for alternatives to the traditional banking system and there is also anticipation of a slowdown in interest rate rises, which is helping bitcoin.
Filip Radwanski | Sopa Images | Lightrocket | Getty Images

Bitcoin climbed sharply Wednesday as investors shrugged off initial fears surrounding U.S. regulators’ crackdowns on industry giants and became willing to take some risk.

The world’s largest cryptocurrency surged 5% in the past 24 hours to as high as $28,474, according to CoinGecko data. Bitcoin has retaken the $28,000 level after dipping below it on Monday following news of the U.S. Commodity Futures Trading Commission FTC’s lawsuit against Binance.

Ether, the second-biggest digital coin, rose nearly 6% to $1,816.10.

Bitcoin has been steadily rising this year after a brutal 2022 that saw collapses of major crypto exchanges and a sharp slump in prices. Investors have taken some comfort from the thought of a reversal in the U.S. Federal Reserve’s interest rate hiking moves, which put pressure on risk assets like stocks.

The reason for the jump Wednesday was not immediately clear. However, it comes amid a broad rise in U.S. stocks. Bitcoin has been known to follow movements in equity markets, with investors treating it like more of a traditional risk asset.

Nasdaq futures were up 100 points, or 0.9%, Wednesday morning.

U.S. regulators have sharpened their crackdown on crypto firms of late, with the CFTC suing Binance and its co-founder Changpeng Zhao for allegedly breaking trading rules by courting clients in the U.S. without authorization.

The Securities and Exchange Commission has also threatened to take legal action against Coinbase for alleged violations of securities rules.

“Broadly we are looking quite bullish here with Bitcoin reclaiming $28K and looking to target $30K next,” Vijay Ayyar, head of international at crypto exchange Luno, told CNBC via email Wednesday.

“In general, when price action starts to absorb negative news this quickly, it indicates that the market is bullish and trending upward. The CFTC case against Binance, while quite important, doesn’t seem to have affected the market that much.”

Bitcoin had earlier gotten a boost from woes in the global banking system. Swiss banking giant Credit Suisse was recently rescued by its peer UBS in a government-backed, cut-price deal.

U.S. tech-focused lender Silicon Valley Bank and crypto-oriented banks Silvergate and Signature have also failed.

The Federal Reserve has sought to cushion the blow of the banking crisis with a lending program known as the Bank Term Funding Program, or BTFP, which aims to help banks meet their obligations to depositors.

Proponents of bitcoin say it can serve as a store of value in times of economic distress and a form of money people can access without the need for a bank account.

However, it is incredibly volatile and has been known to swing up or down 10% in a matter of hours.

“The market seems to be placing greater importance on macroeconomic factors and that the Fed has already begun a form of QE, now known as BTFP, but also that the interest rate pivot might happen sooner than later,” Ayyar told CNBC.

“Against the bank failure backdrop over the past month or so and Bitcoin’s rise, this provides the perfect context for Bitcoin to continue remaining bullish and move higher.”

WATCH: Crypto enthusiasts want to remake the internet with ‘Web3.’ Here’s what that means