Bitcoin rose eight percent in late April after First Republic Bank fell under a negative light, and many analysts believed it would be next to collapse.
Bitcoin Spikes Following More Issues with Banks
Bitcoin had fallen into the high $20,000 range prior, a near $3,000 dip from the $30K, ten-month high it had previously hit. However, now it looks like bank fears are once again on the horizon, and when banks aren’t doing well, that’s usually a cue for bitcoin to step in and save the day once again. At the time of this writing, BTC is back to trading for around $29,800.
Matt Hougan – chief investment officer at Bitwise Asset Management – said in a statement:
Crypto rallies during banking crises, and it looks like the banking crisis may not be over.
Shares in First Republic fell nearly 50 percent over the course of a single day. The company has endured a major slip in deposits ever since Silicon Valley Bank went under. During that initial collapse, the price of bitcoin shot up by more than 20 percent. James Lavish, managing partner at Bitcoin Opportunity Fund, said:
Bitcoin continues to straddle between being the ultimate lifeboat from the current banking system and the leading risk-on asset. As First Republic is now on the verge of collapse, bitcoin represents a ‘safe haven’ versus uncertain bank deposits.
Still, while the news is positive for BTC, many analysts say traders shouldn’t be breaking open the champagne just yet. The Federal Reserve, for example, has hinted that it plans to continue hiking rates in 2023, and that so long as inflation remains a problem, the organization will do all it can to curb its effects. Yuya Hasegawa – crypto market analyst at Japanese crypto exchange Bit Bank – said:
The crypto market learned last month that [the] banking crisis works favorably for bitcoin’s price, but we need to approach it from multiple angles. The Fed Funds futures market is pricing in the beginning of rate cuts later this year, and it could be a source of disappointment if the Fed continues to refrain from commenting on or even denies the possibility of rate cuts this year.
We Need to Remain Careful
Mike McGlone – a senior macro strategist at Bloomberg Intelligence – also threw his two cents into the mix, claiming:
The up-and-coming 24/7 traded leading indicators, revolutionary technologies and assets – bitcoin and Ethereum – may be running into a wall of resistance at the key round number levels of $30,000 and $2,000. Our bias is bullish in the long term for the top cryptos, but an overwhelming force of the stock market going down with the Fed tightening into a recession has the potential to lower the tide for all risk assets, and bitcoin and Ethereum are among the riskiest.
