Background on Bitcoin and its Recent Surge
Bitcoin, the most well-known and highest-valued cryptocurrency in the market, has reclaimed the $100,000 mark for the first time since late January. This upward trend comes after U.S. President Donald Trump announced a trade agreement with the United Kingdom and plans to meet with Chinese President Xi Jinping in Geneva later this week.
Bitcoin’s Performance
On Thursday, Bitcoin rose by 4.62%, trading at $101,537.70, marking its highest level since January 31 when it peaked at $102,424.20 per unit.
Since the U.S. Labor Day on April 2, Bitcoin has seen a 19.23% increase. Year-to-date, it has risen by 8.53%, though it remains far from its all-time high above $106,157 reached in January, which is 4.87% higher.
The overall cryptocurrency market also experienced gains on Thursday, following Bitcoin’s upward momentum and the improved risk appetite.
The CoinDesk Market Index, which tracks numerous digital assets including Bitcoin, increased by 6.8%.
Other Cryptocurrencies’ Performance
- Ethereum, the second-largest cryptocurrency by market capitalization, saw an 18.01% increase and traded at $2,175.13.
- Dogecoin climbed 12.48% to $0.19.
- Cardano rose 12.12% to $0.75.
- Solana grew 9.92% to $160.73.
- XRP increased 7.62% to $2.30.
- Litecoin advanced 5.07% to $94.18.
Reasons Behind Bitcoin’s Surge
Experts from Monex Brokerage House state that the positive news of the U.S. announcing a trade agreement with the UK, which has been trying to reach such an agreement since Brexit, contributed to the market’s positive movements.
Additionally, another factor driving the markets is the news of a trade agreement between the U.S. and the UK, focusing on reducing tariffs on automobiles and steel.
Trump stated that he would reduce tariffs on UK-imported cars, aluminum, and steel while maintaining a base tariff rate of 10%. In return, the UK would expand market access for U.S. exports such as ethanol, beef, and soft drinks.
Furthermore, U.S. and Chinese officials are set to meet next weekend to discuss trade matters, with investors hoping tariffs will be negotiated downward to avoid harming economic growth.
Bitcoin’s Volatility with Trump
The tariff crisis erupted on April 2, “Liberation Day,” due to Trump’s actions, causing widespread market declines. In Bitcoin’s case, this led to a drop that took the asset down to a minimum of $74,400.
Bitcoin first reached $100,000 in December thanks to a notable bullish rally that began with Donald Trump’s electoral victory in early November.
Prior to Trump’s Republican victory, Bitcoin was trading around $67,000.
Market participants viewed the U.S.-UK agreement positively, but cryptocurrencies seemed to disregard the Federal Reserve’s warning, which kept interest rates unchanged at 4.25-4.5%.
The central bank cautioned that it perceives increased risks related to unemployment and inflation, fueling fears of a stagflation scenario in the world’s largest economy.
In this context, some analysts find a favorable angle for Bitcoin. Zach Pandl, Director of Research at Grayscale, suggests that a potential stagflation could be “positive” for the flagship cryptocurrency.
According to his analysis, inflationary and low-growth environments typically harm traditional assets but benefit those perceived as stores of value.
“Bitcoin did not exist during previous stagflation periods, but it can be understood as a modern digital gold, scarce and increasingly recognized as a safe-haven asset,” Pandl concluded.
Key Questions and Answers
- Q: What caused Bitcoin’s recent surge? A: The surge was driven by improved risk appetite following Bitcoin’s upward momentum and a positive trade agreement announcement between the U.S. and the UK.
- Q: How did other cryptocurrencies perform alongside Bitcoin? A: Ethereum, Dogecoin, Cardano, Solana, XRP, and Litecoin all experienced gains ranging from 5.07% to 18.01%.
- Q: What are the factors contributing to Bitcoin’s potential growth? A: Analysts suggest that a possible stagflation scenario could be beneficial for Bitcoin, as it is perceived as a modern digital gold and store of value.
