Bitcoin (BTC-USD) rose 8% on Wednesday, with strategists pointing to the token’s resilience amid market volatility tied to the Middle East conflict.
A move to integrate digital assets into the US mainstream financial system and President Trump’s push to advance crypto-related legislation also drove up crypto stocks and token prices.
Bitcoin climbed to a one-month high above $73,000 as more than $680 million flowed into spot bitcoin exchange-traded funds (ETFs) on Monday and Tuesday. The broader markets lagged on concerns that oil price spikes tied to the Iran war could reignite inflation.
“These ETF flows suggest this isn’t just a short squeeze,” Coin Bureau co-founder Nic Puckrin said.
“They point to institutional allocators treating bitcoin as a geopolitical crisis hedge, or potentially even as a hedge against future inflation,” he added.
Bitcoin is up 11% over the past five days. The token initially dropped to around $63,000 following the US-Israeli strikes on Iran but recovered later that same day. Ether (ETH-USD) has also rallied 11% over the past five days, trading near $2,150.
The move higher comes as Kraken Financial, the banking arm of the crypto exchange Kraken, was granted a “master account” with the Federal Reserve. It became the first digital assets bank to get direct access to the payment system used by traditional banks.
The approval, granted for an initial one-year term, will allow Kraken to settle payments on Fedwire, the core plumbing that banks use to move money between each other without an intermediary.
This is a sign that crypto may increasingly become integrated into the core US financial system. Shares of Coinbase (COIN), Strategy (MSTR), and Robinhood (HOOD) shot up 15%, 11%, and 8%, respectively.
Meanwhile, President Trump publicly called on banks last night to negotiate with the crypto industry over the Clarity Act, a bill aimed at establishing federal oversight over different parts of the industry.
At issue is whether crypto platforms should be allowed to pay customers “yield,” or interest, on their stablecoin balances.
“The Banks are hitting record profits, and we are not going to allow them to undermine our powerful Crypto Agenda that will end up going to China, and other Countries if we don’t get The Clarity Act taken care of,” Trump wrote on Truth Social.
If negotiations move forward, strategists say it could serve as a positive catalyst for the industry.
“[Trump’s] comments suggest the administration may be less aligned with banking-sector opposition to stablecoin yield pass-through than previously assumed,” Fundstrat head of digital assets Sean Farrell said.
Still, bitcoin remains down 16% year to date after notching a fifth consecutive monthly loss in February. The cryptocurrency has struggled to regain its footing since tumbling from an all-time high of $126,000 in October.
Wall Street has lowered year-end forecasts, with even the most bullish analysts warning that prices could fall further before rebounding in the second half of the year.
“This is likely a rally to rent rather than own, but the tape continues to behave constructively for tactical longs,” Farrell wrote Tuesday night.
