Bitcoin has risen nearly 72 percent this year to $28,500, on track for its best quarterly performance in two years, according to CoinDesk, and today’s strong rally has seen its market cap climb to $542 billion.
In comparison, ether is on track for a 50% quarterly gain, while gold has gained more than 7% this quarter and the Nasdaq is up 15%.
About 3 months ago, some experts also predicted that Bitcoin would fall to a low of $12,000 this quarter. However, speculation that the Federal Reserve (Fed) will back away from aggressive rate hikes to stave off a recession has fueled the rally in cryptocurrency markets.
Martin Leinweber, digital asset product strategist at MarketVector Indexes, said: “It’s all about expectations that central banks, especially the Fed, will take easing measures. Of all risk assets, Bitcoin is the most sensitive to liquidity fluctuations.”
Assets with good monetary appeal, such as bitcoin and gold, are benefiting from liquidity injections, said David Foley, managing partner of the Bitcoin Opportunity Fund. He said:
With the Fed policy shifting and having to do some quantitative easing to protect the banking system, money is flowing into sound money assets: gold, silver, and Bitcoin, being sound money, is expected to be the fastest horse in this race.
Some observers said that the liquidity of Bitcoin is shrinking, and the depth of transactions is also declining, and a small amount of funds can cause the market to skyrocket and plummet.
Connor Ryder, an analyst at cryptocurrency data provider Kaiko, wrote in a newly published report:
Although the recent trend of Bitcoin has benefited from the crisis of confidence in traditional finance, due to the lack of upward support due to the lack of liquidity in the past, it is necessary to pay attention to the risk of a sharp decline in the next few weeks.