Banking crisis and bailouts may send Bitcoin to record high this year, experts say

At a tumultuous time for global banks, Bitcoin has been experiencing a remarkable surge, with its supporters eagerly anticipating the coin's next significant milestone of $30,000.

The surge comes after Silicon Valley Bank's collapse on March 8, which created havoc among other lenders, followed by Credit Suisse’s takeover by UBS at the behest of the Swiss central bank. Bitcoin has since appreciated by around 30%.

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The digital currency has surged more than 20 percent since the beginning of March, crossing the psychologically important level of $28,000, its highest since the June 2020 industry shakeup that caused a decline in digital asset prices.

The last time Bitcoin traded at $30,000 was during the collapse of Celsius, a now-defunct lender, in June 2022.

Bitcoin's recent price surge has set off speculation about whether the cryptocurrency will reach new all-time highs in the coming months. While experts differ, there are several factors they agree will impact the next bull run in the digital currency.

Will uncertainty undercut investor confidence?

Cuautemoc Weber, Chief Executive Officer of blockchain infrastructure provider Gateway.fm, said that uncertainty surrounding upcoming regulatory changes may undercut investor confidence and potentially delay the start of a new bull run.

“Cryptocurrency markets are characterized by significant volatility, making it challenging to confidently discern our current position in the market cycle. In the case of a bull market, positive investor sentiment and the belief that prices will rise serve as the primary catalysts,” Weber said.

He added that several uncertainties continue to exist in the cryptocurrency space, particularly with regard to upcoming regulatory changes and these uncertainties may undercut investor confidence, and potentially delay the start of an official new bull run.

Factors in favour of Bitcoin

Blake Harris, the Founding Principal of legal firm Blake Harris Law, believes that a weaker dollar is among factors that could push Bitcoin higher.

While all of the money that is being printed makes Bitcoin a more attractive store of value, it does take time for money to get moved into Bitcoin. Bitcoin is yet to hit its all-time high, he said, adding that the timing of the high is just a guess for anyone.

"There are two things that can push Bitcoin higher. The first is the dollar getting weaker, which we will likely see as the federal government continues to print money to avoid (or delay) a collapse of the banking system. The second is a boom in the economy, which means everyone has more to invest in everything including Bitcoin,” Harris said.

Decoupling from equities, regulatory clarity

Ryan Hansen, Chief Marketing Officer at crypto trading firm Liquid Mercury, noted that fears of a potential global banking crisis had brought the "be your own bank" narrative back to the forefront of investors' minds, creating buying pressure.

Hansen also believes that a decoupling from equities markets and better regulatory clarity could unlock more institutional participation in the asset class and help smooth out volatility.

"If 2022 saw investors and traders largely viewing crypto as a high beta technology trade, then Bitcoin and crypto will need to find another narrative that powers the next bull run. Certainly, things like better regulatory clarity and more thoughtful rules and regulatory frameworks can help to unlock more institutional participation in the asset class, which can unlock a significant amount of buying while hopefully smoothing some of the out-sized volatility that Bitcoin prices have historically seen as a retail-led asset class,” he said.

Shorts forbidden above $25,200

Dmitry Machikhin, CEO at BitOK, pointed out that Bitcoin is a highly volatile asset and that it's difficult to predict with certainty whether a new high is on the horizon.

However, Machikhin noted that shorts are forbidden above $25,200 and that the recent rally has seen a significant increase in spot buyers, meaning longs are the priority until the price hits strong resistance at around $32,000.

Likelihood of bailouts a key factor

Gabriella Kusz, CEO of Global Digital Asset and Cryptocurrency Association, said the recent banking crisis and the likelihood of bailouts will be one of the main factors that determine the next bull run.

Kusz noted that Bitcoin was born in the aftermath of the 2008 financial crisis and that its theory was being reasserted through recent actions by governments and the banking sector.

Ruadhan O., a Ph.D. in theoretical physics who specializes in automated strategies, believes the current bull run looks similar to recoveries seen in late 2015 and mid-2019.

He notes that a new high was likely at the end of 2024 or the start of 2025, as the market adjusts to the next cut in supply.

However, Ruadhan also noted that if the banking crisis intensifies and investors choose to keep their wealth in Bitcoin instead of banks, then a rally to $44,000 or higher could be possible.