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Amidst high global inflation rates, Bitcoin and major market equities have experienced an uptick in the first quarter of 2023. The largest digital asset by market capitalization, Bitcoin, has regained its pre-FTX levels and is on track to reclaim its pre-Terra Luna UST standings. Additionally, it has broken out of a macro logarithmic downtrend during the recent bull rally.
Bitcoin’s Rise Amidst High Inflation
With inflation rates on the rise globally, investors are seeking out alternative investment opportunities. This has led to a surge in the demand for Bitcoin and other crypto assets. As a result, Bitcoin has seen an increase in its value, reaching its pre-FTX levels and on its way to reclaiming its pre-Terra Luna UST standings. This rise in Bitcoin’s value is attributed to the shift in investors’ preferences towards risky assets.
With Bitcoin showing a significant correlation with major market indexes in the macro markets, analysts forecast more upside volatility in April. Nevertheless, the overall effect of crypto volatility could be determined by Ethereum’s Shanghai Upgrade scheduled for April 12.
“The recent bull rally in U.S. stocks should have positive spillover effects for crypto as well – especially since we are now entering the month of April, which has been strong for U.S. stocks (SP500 +2.6%, Nasdaq +2.9%), Bitcoin +17%, and Ethereum +46%. Our big thesis for 2023 that inflation will decline is playing out. All risk assets should rally,” Markus Thielen, head of research and strategy at Matrixport, said.