Why Is Bitcoin Going Up? –Forbes Advisor

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The price of Bitcoin (BTC) has been on a wild ride this week, thanks to the fall of Sam Bankman-Fried and leading crypto exchange FTX.

As the FTX saga unwound this week, BTC plunged 25% from Monday morning through Thursday evening. But since last night, the leading crypto has bounced 10% higher, possibly on wider market optimism that peak inflation has arrived.

Ethereum (ETH), the worlds second-largest cryptocurrency, has followed a similar price trajectory this week. ETH’s has seen a steeper decline from Monday morning to Thursday evening, down a total of 32%. Since last night, ETH has bounced approximately 15% higher.

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Why is Bitcoin Going Up Today?

Until this week, FTX was the fourth largest crypto exchange in the world and was widely considered to be an industry stalwart. But a series of press revelations about the questionable finances of the exchange and its sister business, Alameda Research, both of which were founded and run by Bankman-Fried, has destroyed both companies inside of a single week.

The loss in crypto market confidence from the FTX fiasco hit Bitcoin prices hard all week long. But the price action in BTC was hardly an unending downhill plunge.

Bitcoin rallied on Tuesday on initial reports that Binance would help bail out FTX, only to reverse again quite quickly and head lower. BTC bottomed out on Wednesday afternoon and has rallied through Thursday morning.

Bitcoin Volatility

Volatility and Bitcoin come hand in hand. According to Kraken Intelligence’s September 2022 Market Recap and Outlook Report, Bitcoin’s volatility rose from 52% in August to 64% in September, with a spike of 74% on Sept. 17.

On the other hand, according to the Kraken report, Ethereum’s volatility started the month significantly higher at 89%. Still, it dropped to 78% by the end of the month, with its own spike of 94% on Sept. 17, just a few days after the “merge.”

The Ethereum merge is the platform’s shift from a proof of work network to a proof of stake network.

However, even with this lower volatility, Bitcoin is still notorious for sudden jumps. Given that the financial climate remains extremely unpredictable, investors leaving on edge, there is no guarantee that what we are experiencing will stay, even if the worst of the past year wont return.

What Does Bitcoin Bounce Mean for Investors?

The big question facing investors is whether this is yet another sign that the Bitcoin bottom is in or if the refuge is merely a dead cat bouncewhere prices temporarily rebound amid a longer-term negative trend, only to resume the downward fall after that.

While the bounce has provided a welcome reprieve, the reality is that we are in an unprecedented territory regarding the geopolitical climate, rampant inflation, and the Feds stance on interest rates.

Anyone familiar with the industry knows that even at the best of times, predicting the short-term price action of digital assets is near impossible. That holds particularly true in this market environment.

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