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The price of Bitcoin has shot up in the past day, bringing—as it usually does—the entire cryptocurrency market up with it. At the time of writing, the price of the largest digital asset was $42,748.13—a 4.4% 24-hour increase, according to CoinGecko.
Why now, and why so much?
Well, it’s partly due to yesterday’s big Wall Street announcement: Goldman Sachs became the first major U.S. bank to make an over-the-counter (OTC) cryptocurrency transaction, buying an OTC Bitcoin non-deliverable option (NDO) from Galaxy Digital.
“Bitcoin has been through an interesting couple of weeks, from the Russian invasion to U.S. regulations and even an OTC Wall Street deal,” Scott Norris, co-founder of LSJ Ops, a private U.S.-based Bitcoin miner, told Decrypt. “The financial world seeing Goldman participate gives new confidence to the market and an acute hope that more institutions will be entering the crypto space to supply the demand for it put on them by their clients."
But that’s not all. He said last week’s Bitcoin options were solidly priced at $38,000, and bullish traders broke through “the wall”—perhaps meaning that a new bull run was coming. In other words, those dealing in contracts that bet on the future price of Bitcoin did better than expected.
It also looks like the price of Bitcoin is following U.S. equities—stocks rose on Tuesday, and Bitcoin’s price has recently been more closely tied to stocks.
Philipp Zahrer, co-founder of Cyprus-based blockchain solutions company WhizGrid, told Decrypt that Federal Reserve Chairman Jerome Powell's comments that bigger interest rate hikes may be needed to rein in inflation also are playing a part.
“With inflation being at the highest level since the 1980s, the Federal Reserve has responded by raising the interest rates from near-zero values to 25 basis points, and has plans to raise them even higher if deemed necessary, which may be reflected by the price spikes of equities,” he said.
Besides Bitcoin, Ethereum, the second largest cryptocurrency by market cap, was up over 3% in the past 24 hours, trading for $3,007.33.
And the altcoin market has followed. Cardano (ADA), the No. 8 cryptocurrency by market cap, was up 5.3% at the time of writing, trading for $0.967996, while “Ethereum-killer” Solana (SOL), No. 9, had gained 5% to $92.65.
But Jason Deane, an analyst at Quantum Economics, told Decrypt that “the markets are in a strange place right now with so many external factors exerting their influence,” and that it was “extremely difficult to tell what will happen next."