Bitcoin close to $30, what drives the growth and is it sustainable?

Bitcoin price expressed in the US dollar rose to around USD 28 this week, which was the highest level since June 900. In the last two weeks alone, the BTC/USD rate has soared by more than 2022%. and since the low in November last year, the increase was over 30 percent.

What are the reasons for the recent increases?

Can the current increases be connected only with the banking crisis and the fact that bitcoin attracted capital from the traditional financial sector? To some extent, it is possible, as well as gold, which has risen to about $ 2000 per ounce. However, it seems that this is not the only reason, but the banking crisis also fueled it. We are talking about the events on the USDC stablecoin, where deposits of the issuer Circle were to be at risk in a bankrupt bank, which led to the detachment of USDC quotes from the exchange parity with the US dollar. It was the 11th day of March when fear fell on the market. Nevertheless, bitcoin hit its local low at $20 during this time.

From that moment on, the BTCUSD rate began to grow rapidly to the levels observed today, accompanied by a strong decrease in USDC capitalization. This may mean that part of the capital went to USDT, because from that moment Tether is traded at a premium against the US dollar (USDT/USD rate is above 1,00), and part to bitcoin, whose dominance in the market has skyrocketed. It can therefore be presumed that a large part of the traffic that we can attribute in the media to the flight of capital from the traditional system to cryptocurrencies is not exactly that. This is likely an overestimation within the crypto market, which is facing increasingly heavy regulations, including statements that anything but bitcoin can be a security.

BUSD sale is underway

To all this, one should also add the fact of the outflow of capital from BUSD. Here, too, the American regulator banned the issuance of the stablecoin of the Binance exchange by Paxos, effectively causing its disposal in favor of probably USDT and BTC. Since the November 2022 low, BUSD's market capitalization has fallen by $14 billion. USDC capitalization fell by 8 billion. USDT's capitalization increased by USD 11 billion during this time. It seems that these may be the main forces pushing the BTC/USD quote, and the observation of the USDT premium against USD, as well as the BUSD/BTC premium to bitcoin, may be crucial, because Binance reportedly has yet to convert its guarantee fund from BUSD to USDT and BTC.

From the point of view of the chart, the bitcoin price is currently in the potentially crucial zone of 28-30k. USD. Only defeating it could open the way to higher levels. Otherwise, with the stabilization of quotations in the other markets mentioned, the driving forces of bitcoin may weaken.