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Bitcoin, the largest cryptocurrency by market cap, hit $30,000 on Tuesday for the first time since June 2022. In 2023 alone, Bitcoin has gained 80 per cent, data from coinmarketcap showed.
For the past three weeks, the crypto token was stuck in the range of $26,500 and $29,400.
"As expected, Bitcoin has entered an early bull phase by breaching the $30,000 mark for the first time since June 2022. The crypto market cap is at a whopping $1.23 trillion mark with BTC and ETH leading the effort. The combined effect of the Shanghai Ethereum upgrade, Bitcoin halving, and other macroeconomic factors are currently driving the momentum in the crypto market," said Shivam Thakral, CEO of crypto exchange BuyUcoin.
"The surge may be attributed to investors' positive outlook on the upcoming US inflation data, anticipating it might have an impact on the Federal Reserve's monetary policy," said Edul Patel CEO and co-founder of crypto platform Mudrex.
Ethereum, the second biggest crypto token, was trading at $1,921 on Tuesday.
The crypto industry is undergoing intense scrutiny in the US. Coinbase received a notice from the Securities and Exchange Commission (SEC) declaring its intention to bring an enforcement action. Earlier, the US Commodity Futures Trading Commission sued Binance founder Changpeng Zhao for alleged violations of derivatives regulations.
However, the market has been seeing a rally since the collapse of three US banks as it revived the narrative that digital tokens offer a more attractive alternative to fiat currency and traditional finance.
Moreover, the central banks are also seen reaching the peak of their rate hike cycle. The collapse of banks has also increased the chances of a pause in a rate hike by the Fed. The Reserve Bank of India (RBI), last week, kept the benchmark interest rate, repo rate, unchanged at 6.5 per cent.
Investors are also eagerly anticipating a major revamp to the Ethereum blockchain this week, which will allow them to gain access to more than $33 billion of ether currency.
The software update, Shapella, will let market players redeem their "staked ether" - coins they have deposited and locked up on the network over the past three years in return for interest.
However, as Bitcoin surges to a 10-month high, Thakral said that it might be followed by a pullback.
"Bitcoin's new resistance level is now at $30,500, while its support level has been established at $29,200," said Patel.
"As we approach Bitcoin halving which is due in May 2024, we can expect the BTC price to rise further," said Om Malviya, president of blockchain adoption firm Tezos India.
