Bitcoin skyrockets 8% amid fears for U.S. banking system

Cryptocurrencies experienced a surge on Wednesday due to concerns among investors about the U.S. banking sector, with First Republic Bank facing difficulties.

Bitcoin increased 8% to $29,828.25, while Ether rose 6% to $1,957.02.

Although both assets are still below the significant levels of $30,000 and $2,000 that they had two weeks ago, respectively, which were their highest levels since last year.

Matt Hougan, CIO of Bitwise Asset Management, stated that the current problems at First Republic could drive the cryptocurrency's price increase as crypto rallies during banking crises.

Bitcoin rallied 22% in March due to the crisis among U.S. regional banks as investors realized its potential as a hedge against uncertainty and an alternative banking system.

The U.S. dollar index fell as crypto surged, and its inverse relationship with Bitcoin remained stable. Meanwhile, Bitcoin's correlation with gold has increased since March and now stands at its highest level in almost two years.

Despite the year-to-date uptrend, uncertainty still looms over crypto. Traders are monitoring the Federal Reserve's decision on raising interest rates to fight high inflation and when it will start cutting rates.