Bitcoin price trajectory continues to defy explanation by posting gains in an economy that, to economists and bankers, is beset by problems. The cryptocurrency reached as high as $27,500 this morning before sliding. As of this writing, it is changing hands at $27,352, up by 3% from a day earlier, based on data from CoinGecko. On a weekly basis, it is up by almost 36%.
The increases in its price run counter to prevailing economic wisdom that expects an imminent recession. Analysts say Fed intervention and bank failures in the last week has dented business and consumer confidence in the current state of the economy and could lead to a pullback in spending during the second quarter. Less money to go around translates to fewer investment dollars for risky assets like bitcoin. It could strain liquidity for crypto markets, inducing more volatility and a collapse.
A Precipitous Road Ahead
This is not the first time that bitcoin price has run contrary to expectations. Back in 2017, the premiere cryptocurrency racked up record highs even as economists and central banks derided its utility and worth.
But while the earlier jump in its price was a sign of investor confidence in it, Bitcoin is faced with existential threats this time around. Technical indicators relating to its network are flashing red. There was a burst of liquidations – totaling almost $231 million in long and short positions – yesterday, indicating continued loss of investor confidence in the token. Even though it continues to dominate trading volumes in crypto markets, the road ahead for bitcoin is precipitous and dangerous.