BTC recovers amid decline in SPX and problems in FRC
April 26, 2023 1:22 pm
Over the last few weeks, Bitcoin has managed to reach a local high of $31k. The achievement of this level triggered a reaction from sellers and boosted the bearish sentiment. As a result, the BTC price formed a false breakout at the $30k level.
Then, the situation worsened, and the cryptocurrency downwardly broke $28.5k, which was an important accumulation area. The asset continued to decline toward $27k. In this light, the likelihood of a retest of $26k dropped and the correction slackened.
Banking crisis 2.0
However, bears failed to push the price lower. In the US, the second stage of the banking crisis is gaining momentum. As a result, First Republic Bank lost 50% of its stock value. Since the beginning of 2023, the bank has lost 93% of its stock value.
Against the backdrop, investors quickly withdrew $100 billion from FRC bank accounts. The Federal Reserve has already stated that it is ready to provide liquidity to the bank, and the US authorities are ready to nationalize the company. As of April 26, the likelihood of a 0.25% rate hike next Wednesday is 86%.
The SPX index showed a decline amid a sudden drop in the FRC quotes. The asset downwardly broke $4,100 and dropped to $4,000-$4,050. Meanwhile, BTC showed local growth and recovered above $28k.
The banking crisis in early spring 2023 forced the Fed to take measures and launch a local stimulus program. As a result, BTC advanced by about 50% from its low. It is quite possible that the second stage of the banking crisis will provoke monetary policy loosening and an increase in liquidity volumes.
At the same time, it is reported that less than 35% of stocks included in the SPX outperformed the index over the last 20 days. The situation is similar to the peak of the dot-com boom and reflects the weakness of bulls. Meanwhile, WSJ reports that insiders significantly increased the purchase of their companies’ shares in March.
BTC/USD Analysis
Bitcoin reacted to recent events with local growth and climbed above $28.3k. The asset is a step away from consolidating above $28.5k, which is a key support zone for resuming the upward movement in the short term.
However, $28.5k is a strong resistance zone, which has already affected the weakening of the bullish impulse. Technical metrics reached the equator of the bullish zone but then moved to a flat movement, indicating the strength of sellers.
Meanwhile, it is expected that bullish sentiment for BTC will grow in the near future. In addition to the growing interest in Bitcoin amid problems in the banking system, Bloomberg reports that the Bitcoin halving may lead to a price increase to $50k. Also, Standard Chartered believes that the cryptocurrency could reach $100k by the end of 2024.
Conclusion
The asset reacted positively to the news about the crisis in the US banking system. If the situation continues to worsen, BTC will go on rising, thus attracting large investors. The nearest targets for the asset to resume upward movement are $28.5k and $29.1k. Considering the aggravation of the liquidity situation, Bitcoin will remain an important safe-haven asset.
The material has been provided by InstaForex Company – www.instaforex.com
Over the last few weeks, Bitcoin has managed to reach a local high of $31k. The achievement of this level triggered a reaction from sellers and boosted the bearish sentiment. As a result, the BTC price formed a false breakout at the $30k level.
Then, the situation worsened, and the cryptocurrency downwardly broke $28.5k, which was an important accumulation area. The asset continued to decline toward $27k. In this light, the likelihood of a retest of $26k dropped and the correction slackened.
Banking crisis 2.0
However, bears failed to push the price lower. In the US, the second stage of the banking crisis is gaining momentum. As a result, First Republic Bank lost 50% of its stock value. Since the beginning of 2023, the bank has lost 93% of its stock value.
Against the backdrop, investors quickly withdrew $100 billion from FRC bank accounts. The Federal Reserve has already stated that it is ready to provide liquidity to the bank, and the US authorities are ready to nationalize the company. As of April 26, the likelihood of a 0.25% rate hike next Wednesday is 86%.
The SPX index showed a decline amid a sudden drop in the FRC quotes. The asset downwardly broke $4,100 and dropped to $4,000-$4,050. Meanwhile, BTC showed local growth and recovered above $28k.
The banking crisis in early spring 2023 forced the Fed to take measures and launch a local stimulus program. As a result, BTC advanced by about 50% from its low. It is quite possible that the second stage of the banking crisis will provoke monetary policy loosening and an increase in liquidity volumes.
At the same time, it is reported that less than 35% of stocks included in the SPX outperformed the index over the last 20 days. The situation is similar to the peak of the dot-com boom and reflects the weakness of bulls. Meanwhile, WSJ reports that insiders significantly increased the purchase of their companies’ shares in March.
BTC/USD Analysis
Bitcoin reacted to recent events with local growth and climbed above $28.3k. The asset is a step away from consolidating above $28.5k, which is a key support zone for resuming the upward movement in the short term.
However, $28.5k is a strong resistance zone, which has already affected the weakening of the bullish impulse. Technical metrics reached the equator of the bullish zone but then moved to a flat movement, indicating the strength of sellers.
Meanwhile, it is expected that bullish sentiment for BTC will grow in the near future. In addition to the growing interest in Bitcoin amid problems in the banking system, Bloomberg reports that the Bitcoin halving may lead to a price increase to $50k. Also, Standard Chartered believes that the cryptocurrency could reach $100k by the end of 2024.
Conclusion
The asset reacted positively to the news about the crisis in the US banking system. If the situation continues to worsen, BTC will go on rising, thus attracting large investors. The nearest targets for the asset to resume upward movement are $28.5k and $29.1k. Considering the aggravation of the liquidity situation, Bitcoin will remain an important safe-haven asset.
The material has been provided by InstaForex Company – www.instaforex.com
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