Analysts are unsure what prompted bitcoin’s recent hour-long surge, but investors have gained hope about the token after March’s banking crisis.

Bitcoin, the largest cryptocurrency by market capitalization, topped $30,035.69 at press time –  the highest price the crypto has been valued at since early June. 

Over the past 24 hours, bitcoin prices shot up by 6.11%, at 06:15 UTC, creating further investor optimism. Since March’s banking crisis, bitcoin prices were hovering around the $28,000 mark as people began to distrust conventional banking systems. Over the past 30 days, Bitcoin enjoyed a rough 46.2% increase in price.

What prompted the surge?

“There isn’t a clear catalyst for this spike,” says Edward Moya, senior market analyst for foreign exchange market maker Oanda. But Moya speculates that bitcoin’s recent surge may have been partly from crypto trader frustration on social media regarding an article from the New York Times regarding the token’s energy consumption.  

Moya added that bitcoin’s price increase also coincided “occurred around the release of news that Federal Home Loan Bank debt issuance had lessened, signalling that “the banking crisis was easing.”

Bitcoin wins, crypto wins

According to the S&P Cryptocurrency Broad Digital Market Index, overall performance rose by 3.21% over the past day.

Ether (ETH) prices also went up, reaching $1,917,88 at press time – roughly a 1.7% increase in the past 24 hours, and a 30.1% increase from the past 30 days. 

Other major crypto tokens also enjoyed the benefits of the market, and are doing generally well. ARB, layer 2 blockchain Arbitrum’s token, went up more than 2.8%, and XRP prices rose above 1%.

Crypto-related stocks also enjoyed the benefits from bitcoin’s rise. US-based crypto exchange Coinbase (COIN) and corporate bitcoin vault MicroStrategy (MSTR) enjoyed increases of more than 7.5%.

In comparison, equity indexes closed at a rough plateau – S&P 500 and Dow Jones Industrial Average only increasing at minute scale, while tech-heavy Nasdaq Composite lost 0.03%.

Markets can expect to keep a lookout for the March Consumer Price Index (CPI) report that will be published this week for any indicators that inflation will be continuing its trend of slowdown.

US Inflation and Bitcoin Prices

This February, inflation rates in the US slowed from 6.4% to 6.0% from January. In comparison, inflation rates should be at an ideal rate of 2.0%. 

As inflation rates are published every month, they have chances of potentially impacting bitcoin prices. Case in point: after February’s report, bitcoin leaped past $26,000, and has continued to steadily rise.

If inflation continues its slowdown, central bankers may find themselves loosening up the ongoing, interest rate hike that they implemented last year. However, it isn’t certain as to what effects bitcoin will experience as a result.

Despite this, signs are pointing out that as people start to lose confidence in the traditional banking system, bitcoin prices seem to rise up. Amidst the US bank failures, investors may have perhaps found solace in assets that are sturdier, and retain value over time despite harsh market conditions. 

What are analysts looking at?

If investors choose to side with bitcoin, they’d obviously need a convincing case.

First, they’ll look at the first wave of quarterly reports from major banks like JPMorgan Chase, Wells Fargo, and Citigroup. Analysts are expecting that there will be largely a downwards outlook. 

Richard Mico, the U.S. CEO and chief legal officer of Banxa, a payment-and-compliance infrastructure provider to the crypto industry says that current attitudes are that where “BTC is also being seen as a reliable store of value that lacks the issues that come with storing your money by way of a third-party intermediary, or a bank.” Mico notes that there’s a decreasing correlation with equity markets since 2021, and that BTC is slowly getting recognition as a risk-off asset.

Despite the optimism, Joe DiPasquale, the CEO of crypto fund manager BitBull Capital is cautious about how bitcoin’s price will sustain. According to DiPasquale, bitcoin’s rise is “a retest of the range high established in March after the initial surge from under $20,000. Success of this test would see the price claiming $30,000 while a failure here should see BTC drop to $25,000, followed by $23,000.”

DiPasquale says that bitcoin’s current prices are testing July 2021’s lows, which became the precedent for a big rally.