Bitcoin rises above $28,000 for the first time since June

Yahoo Finance’s David Hollerith joins the Live show to discuss the rise in bitcoin and the outlook for crypto amid the banking crisis.

Video transcript

RACHELLE AKUFFO: Keeping an eye on Bitcoin moving higher today, the cryptocurrency surged last night on the announcement that the Switzerland-based bank UBS reached a deal to buy rival Credit Suisse. Also in focus is the potential rate pause or hike by the Federal Reserve. For more on what impact that's having on the crypto market, let's get to Yahoo Finance's David Hollerith. Hey, David.

DAVID HOLLERITH: Hey, Rachelle. So it's been a very interesting past 10 days, I guess, we could say, for Bitcoin. It's been on a tear. And there's two things going on here. And one is the fact that we've been into-- in a couple of weeks of what we would call a banking crisis. And that's, obviously, changed how the Federal Reserve might need to react in its upcoming rate hiking decision that's set for Wednesday.

And so as a risk asset, a lot of analysts I'm speaking with or I have been speaking with have been saying that Bitcoin and other risk assets are poised to do well in the near term. Technology stocks have benefited a little bit from this, but Bitcoin, by far, has sort of outperformed other assets. Goldman Sachs put out a research note on Friday before Bitcoin sort of crossed this $28,000 hurdle, pointing out that it, far and away, was the best performing asset of 2023 so far, so, year to date. So that's interesting.

And then we have this other sort of story, which Bitcoin diehards sort of believe in, which is that Bitcoin is-- its purpose was, when it was created, was to sort of not be in the control of government. And given that we're seeing sort of this banking crisis issue, Bitcoin is sort of being viewed, again, as a safe haven. That being said, that's-- investors have thought of it like that for a long time now. And that's often debated. And for the last two years, it was debunked.

But it looks like that is-- that narrative is sort of coming back into the market. I think the problem of deciphering the two is that it really comes down to the fact that both are happening right now. So in terms of Bitcoin's trajectory, that obviously looks good for it. We're going to need more data before we can sort of see if people-- investors are moving to it as a safe haven asset.

But interestingly, it's correlation. So how much it moves compared to gold in the NASDAQ, NASDAQ, you can think of as technology stocks, gold. It's traditionally thought of as a safe haven. It has been corre-- Bitcoin has been correlating more with gold recently and less with the NASDAQ. So that's been a change that we've seen over the last two weeks. And we'll continue to watch that. But in general, Bitcoin, compared to other crypto assets, is definitely seeing the highest bid right now.

RACHELLE AKUFFO: I certainly wasn't expecting Bitcoin to go back to being the safe haven after the wild ride that it's been on then. So what are the expectations here? We know there are all these astronomical sort of predictions as to where Bitcoin could go. How much more of this will we need to see, though, before we can say, yes, this might actually be the turning point for crypto?

DAVID HOLLERITH: Yeah, it's a good question. I mean, I think if you're looking at the crypto market, at Bitcoin, including a few-- about a month ago, things didn't necessarily look so bright. And now we have people coming out with a $1 million price target in 90 days or 87 days, I guess, is what we've seen. And that looks like it has about a 1% chance of being true.

But, you know, I think that if risk assets stand to benefit and Bitcoin is not something that is as connected-- I mean, it's less connected from the banking system than it's ever been-- I think hedge funds at the very least will look at it as a way to play on a macro narrative that is more beneficial to risk assets right now. That's what it sounds like from what I'm hearing.

RACHELLE AKUFFO: Certainly one to watch and we'll see what happens when we get that rate pause or hike, whatever the rate announcement ends up being from Jay Powell this week. Yahoo Finance's David Hollerith, thank you for that breakdown.