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Bitcoin in recovery mode amid renewed banking concerns – Cryptocurrency News
April 28, 2023 10:28 amVideo
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Bitcoin and most major altcoins have experienced some wild swings during this week after a barrage of contradicting economic developments. Initially, digital assets slumped from their recent multi-month peaks due to a broader risk-off sentiment, which was reinforced by aggressive selling from two large crypto accounts. However, cryptocurrencies rebounded strongly on the back of another systemic incident in the US banking sector as First Republic Bank came under severe pressure from huge deposit outflows.
Cryptos creep back up, crucial levels on sight
Lately, crypto markets experienced a significant downside correction after most digital coins hit multi-month highs. Even though some macroeconomic concerns triggered a first round of weakness, large transactions from both a US government wallet and from the failed exchange Mt. Gox’s account were mainly responsible for the downward spike. The magnitude of this recent decline suggests that there was a mass liquidation of leveraged positions, indicating that risk-seeking investors remain a dominant force in the crypto space.
Nevertheless, these declines proved to be short-lived as the bulls quickly worked their way back to regain lost ground. Specifically, Bitcoin got a boost from the ongoing banking and budget crisis in the US, with investors actively seeking assets shielded from systemic failures to allocate their money. Meanwhile, some upbeat earnings from the tech sector gave an additional lift to the Nasdaq 100, dragging the risk-sensitive crypto market higher.
In the upcoming days, crypto bulls are likely to attack the crucial psychological levels of $30,000 and $2,000 for Bitcoin and Ethereum, respectively. At least that is what the famous Crypto Fear & Greed Index currently suggests as it climbed to 64, the highest level since April 18. In 2023, we have seen digital assets acting as the best of both worlds, moving in lockstep with stock markets when risk-on mood prevails, while also serving as a shelter in turbulent periods. Is this a matter of excess liquidity or are cryptos starting to decouple from traditional assets?
Regulatory woes undermine sector
Amid all this uncertainty within the traditional financial sector, which has resulted in money fleeing from bank deposits towards digital deposits, the cryptocurrency space continues to suffer from recurring scandals and regulatory assaults. In April 27, a Texas court slapped a record-breaking $3.4 billion penalty to a South African national and CEO of Mirror Trading International Proprietary Limited (MTI) for major law violations concerning a fraudulent Bitcoin scheme.
In the last few months, more and more crypto-related firms are aiming to obtain licenses away from the US in order to avoid a stricter regulatory framework, with Gemini exchange being the latest example as it recently announced its intentions to launch a non-US crypto derivatives platform. Surprisingly, investors seem unresponsive to these developments despite having fresh memories of a series of collapses, frauds and hacks in the crypto sector.
Technical levels to watch
BTCUSD (Bitcoin) saw its remarkable 2023 surge peak at the 10-month high of $31,064 before experiencing a moderate pullback. Nevertheless, the leading digital coin quickly retraced higher, currently holding above the $29,000 handle.
If the rebound extends above the crucial $30,000 psychological mark, the 2023 peak of $31,064, which is also a 10-month high, could act as the first barrier for the bulls to clear. Even higher, the price could challenge the May resistance zone of $32,380.
Alternatively, another round of weakness could bring the April low of $26,945 under examination, a break below which may open the door for the $25,250 hurdle.
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