The price of Bitcoin, the flagship cryptocurrency, spiked by 1.6%, reaching an intraday high of $28,621 on the Bitstamp exchange.
Shares of U.S. regional banks continued their downward trajectory on Tuesday. This has likely fueled Bitcoin’s most recent price rise.
The KBW Regional Banking Index (KRX) is last down 4.4% at press time due to by falling shares of PacWest Bancorp, Western Alliance Bancorp, KeyCorp, Comerica, and Zions Bancorp.
PacWest Bancorp saw its shares plummet by 16.4%, while Western Alliance Bancorp experienced a substantial 24.6% drop. Other regional banks experienced significant declines as well, with KeyCorp down 8.8%, Comerica down 8.9%, and Zions Bancorp down 7.3%. The decline in regional bank shares has raised concerns about the stability of the regional banking sector.
This comes after regulators facilitated a deal for banking titan JPMorgan Chase to buy failing lender First Republic.
In the meantime, the Federal Reserve is expected to announce a quarter-point interest rate hike after its meeting on Wednesday. This anticipated increase is likely to have a further impact on the financial markets, including the cryptocurrency sector.
The spike in Bitcoin’s price can be seen as a response to the uncertainty surrounding the traditional banking system as investors seek alternative assets to hedge against potential economic volatility.
As the market grapples with the implications of the JPMorgan Chase-First Republic deal and the potential interest rate hike, it remains to be seen whether Bitcoin will manage to reclaim the $30,000 mark.