Bitcoin price continues to make news. According to data from CoinGecko, it hit a high of $28,500.16 this morning. As of this writing, it is trading at $28,161.81, up 2.5% from its price a day earlier. In the last one week, amid a series of banking crises, bitcoin’s market capitalization has swollen from $457 billion to $543.4 billion.  

An Uncorrelated Asset

Analysts and commenters attribute the perceived rush of money into bitcoin on its status as an asset class uncorrelated to mainstream finance. Vijay Ayyar, vice president of corporate development at cryptocurrency exchange Luno, told CNBC that the cryptocurrency’s current price movement vindicates the argument that bitcoin is an uncorrelated asset.

But bitcoin price is very much at the mercy of Fed policies. It was the Fed’s low interest rate approach that fed into its price movements over the years and the pandemic stimulus drove its price to record highs in 2021. A price pullback occurred last year with rising interest rates after investors shifted funds from risky assets like bitcoin towards government securities.

A Price Pump

The current absence of a correlation is a function, not of investor confidence in the asset class, but of a price pump from liquidations and supply of fresh Tether, a controversial stablecoin that has been accused of fixing bitcoin price.

Liquidations by whales, or investors who hold more than 1,000 BTC in their wallets, continued over the weekend. According to data from Coinglass, investors cashed out of positions worth $101.36 million yesterday.

Meanwhile, the supply of Tether has risen by more than four billion in the last month. A 2018 research paper alleged that a rise in Tether supply generally precedes or coincides with a rise in bitcoin price.