Bitcoin (BTC) surged past $47,000 ($62,000 AUD) yesterday and looks to be on the warpath to reversing a pretty rough start to the year. The world’s largest cryptocurrency is up a total of 15% over the past week, compared to a 16% rise in Ethereum (ETH), a 30% rise in Cardano (ADA) and a 25% increase in Solana (SOL) over the same time period.
Why Is BTC Price Increasing?
Earlier this month, Bitcoin increased rapidly in price, spiking from $37,500 ($50,018 AUD) to $44,500 ($59,355) in just a few hours, owing to speculation that Russia and its citizens would use cryptocurrencies to dodge economic sanctions. After this rumor proved to be a little less substantial than everyone thought, the price tanked again.
However, as of the 16th of March, the price of Bitcoin has begun steadily increasing in the first major, sustained rally of 2022. While the S&P 500 also rallied during the same period (gaining 9% since March 16) Bitcoin has grown a more substantial 25%, showing a strongly renewed interest in the broader crypto market.
Bitcoin’s rally comes as Do Kwon, the co-founder of Terra (LUNA), promised to buy $10 billion worth of Bitcoin to use as reserves for Terra’s US Dollar stablecoin, UST. Kwon has so far held up his side of the deal, with the Luna Foundation Guard (LFG) bitcoin wallet address purchasing more than 27,000 BTC worth around $1.3 billion ($1.73 billion AUD).
Without getting too technical, Bitcoin’s recent surge also seems to be driven by an increased demand from the spot market, meaning that more investors want to buy actual Bitcoin right now, rather than speculate on its price in the future.
Will This Rally Last?
According to market analyst, Damanick Dantes from CoinDesk, an increase in spot demand for Bitcoin generally shows up around market turning points, which suggests that the current rally could be here to stay for a while longer. This is further supported by increased buying from big names like Do Kwon which seems to have pumped some positive sentiment back into the overall crypto market as well.
There is also a renewed appetite for altcoins like Solana (SOL) and Cardano (ADA), which suggests that crypto investors are starting to make riskier plays. If past market rallies are any guide, strong altcoin rallies usually coincide with a sustained upward movement of the entire crypto market.
It’s always anyone’s guess when it comes to predicting moves in crypto, but the underlying conditions of this current rally look somewhat promising, at least for the foreseeable future.