Kategorie: Bitcoin News

• Bitcoin and other financial assets now have a Credit Suisse problem.

• Credit Suisse credit default swaps signal that the company could collapse.

• Credit Suisse stock price plunged by 20% and reached a record low.

Bitcoin price came under intense pressure on Wednesday as the banking sector came under a significant strain. BTC pulled back from the year-to-date high of $26,548, to a low of $24,526. It has retreated by ~7.8% from its highest point this week.

Credit Suisse crisis deepens

Bitcoin price has been in a strong bullish trend in the past few days as investors reacted to the ongoing performance in the banking sector. After falling to a low of $19,500 last week, the coin made a spectacular recovery as it jumped to a high of $26,548. 

This rally happened after America’s regulators decided to bailout key banks like Silicon Valley Bank (SVB) and Signature Bank. They decided to provide a backstop for their depositors, many of whom were companies in the crypto industry, as we wrote here.

The most important part of the bailout was the fact that it saved USD Coin, the second-biggest stablecoin in the world. Circle, the parent company of USDC, had over $3.3 billion deposited in the company. If it had failed, the ripple effect on the crypto industry would have been dire.

Now, it seems like we have another bank crisis. Credit Suisse stock price plunged by more than 20% after the company lost confidence of another key investor. Earlier this month, the company’s biggest shareholder, Harris Associates, decided to sell its entire stake. 

And on Wednesday, Saudi National Bank said that it will not provide more finance to the company. Therefore, there are significant risks that the company will fall. Indeed, its credit default swaps have risen, signaling that investors expect the bank to fall.

A collapse of Credit Suisse would have some positives for Bitcoin prices. For one, it will lead to a pause in interest rate hikes by the Fed and other central banks.

Bitcoin price forecast

The BTC/USD price soared to a high of 26,548 on Tuesday and then pulled back to a low of 24,102. As it dropped, BTC moved below the key support level at 25,275, the highest point in February. On a positive note, the pair’s 50-day and 100-day moving averages have formed a bullish crossover. The coin has also formed what looks like a small head and shoulders pattern. 

Therefore, I suspect that it will continue falling in the next key support at $23,000. A move above the key resistance point at 25,275 will invalidate the bearish view.

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The post Bitcoin price recovery at risk amid new Credit Suisse crisis appeared first on CoinJournal.

Key Takeaways

• Bitcoin has surged beyond $26,000 as interest rate expectations flip 
• Inflation reading provides further impetus as investors dream of return to lower interest environment and surging crypto prices
• There are reasons to be hesitant here, however, writes our Analyst Dan Ashmore
• Shutdown of three crypto banks will hurt industry, while there has been nothing but bearish developments since the start of the year
• The decoupling from other risk assets is also unusual and has not been seen to the upside since 2021

I don’t really make predictions because what would be the point? I’m just a boy hitting keys on a laptop, and I know better than to fool myself into thinking I know enough to predict the market. 

However, the speed of this Bitcoin run-up surprises me. Not that you should put any weight at all into that – if you’re in the habit of trusting people’s words on the Internet, I suspect your bank wallet is already hurting, anyway – but let me explain what is confusing me. 

What is happening to Bitcoin?

First, let us surmise what has happened in the last week to kick this rally off. 

We saw the startling collapse of Silicon Valley Bank (SVB) last week, followed by Silvergate, which sent shockwaves throughout the market. This had particular implications for crypto for a couple of reasons. 

The first was USDC, the second biggest stablecoin on the market. Revealed to have 8.25% of its reserves held in SVB, the market feared for the solvency of the stablecoin. Of course, this fear all settled down when the US administration stepped in to shore up the crisis and guarantee deposits would be made whole. 

This shored up the panic and crypto began rebounding. But that is not all that happened. The fact that the banking sector wobbled so drastically shifted market expectations surrounding the future path of interest rate hikes. 

With such creaking evident, the market has moved to betting that the Fed is more or less done with interest rate hikes. Fed futures currently imply a 72% chance of no hike at next week’s Fed meeting. Just last week, this was 0%, with the baseline expectation (70%) expecting a 50 bps hike.

Looking further out at the long-term trajectory, the prognosis has shifted even more dramatically. There is now only a 1.6% chance of higher rates in July, compared to 100% last week, again looking at futures. There is even a 31% chance that rates will be lower in July than they are today. That is a remarkable flip. 

This has sent Bitcoin aggressively upward, surging beyond $26,000 as I write this, for its highest level since last June. It has also been aided by the CPI reading this afternoon, coming in at 6%, its eighth consecutive decline and the lowest metric since September 2021. 

Has Bitcoin risen too much?

But does this make sense? 

While on the one hand, this is exactly what we would expect given the enormous flip in rate forecasts, I am confused as to the sheer level of the outperformance vs other risk assets. This is a divergence which we have not seen since the heyday of the bull market back in 2021. 

That should provide thought. Of course, Bitcoin is capable of moves that other assets can only dream of matching, so maybe it’s just doing what it likes to do. 

But then there is the implications arising out of losing three crypto-friendly banks – Silvergate, SVB and Signature. The environment in the US is now barren for crypto firms. Whether they can simply move abroad remains to be seen.

But even if so, the fact the world’s biggest economy is pushing these crypto firms out is not a good thing for the industry at large. Is it anything to do with Bitcoin specifically? No. But the market is driven by emotion, and there is also the fact that onramping is much harder now, and Bitcoin is still tied to the crypto industry as a whole. 

The strict regulatory environment, with the clampdown headlined by the shutdown of BUSD last month, had already worsened significantly since the turn of the year. Throw in various bankruptcies that came post-FTX (led by Genesis and the demise of DCG) and there are plenty of bearish variables here regarding the long-term future of the crypto industry. 

This is not to say that these can all be overcome. But for crypto to decouple from other risk assets to this extent, following the shutdown of three vital banks for the industry, does present food for thought. We haven’t seen $26,000 in a long time, and it feels – to my far-from-confident mind – like it is still a bit premature.

Time will tell I guess, but for now, it’s a nice change to see some green on the charts for a change. 

The post Why is Bitcoin going up? $26K breached but there is reason for suspicion appeared first on CoinJournal.

Key Takeaways

• Crypto volatility is back up to levels last seen when FTX collapsed in November
• $791 million of liquidations rocked investors between Thursday and Sunday
• $383 million of longs were liquidated on Thursday and Friday, the largest 48-hour number of the year
• News that deposits will be made whole at SVB propelled the market upwards late on Sunday, with $150 million of short sellers liquidated as Bitcoin retook $22,000
• Despite Fed move stablising prices and 2023 showing a bounceback, the long-term implications for the crypto market are negative here and should concern investors

For once, it’s not crypto doing the collapsing. Trad-fi was feeling left out of the party, evidently, as the banking sector wobbled in a big way this weekend. 

Silicon Valley Bank (SVB) is no more, in what amounts to the largest collapse of a US bank since 2008, when Lehman Brothers pulled its best Satoshi Nakamoto impression and disappeared into the ether (pun not intended). 

While the drama may have centred in trad-fi, crypto bounced around aggressively over the weekend as a variety of knock-on effects rumbled. SVB was a crypto-friendly bank, as was Silvergate, which was announced to also be winding down last night. 

This, as well as the fact that the entire financial markets wobbled, meant crypto faced a storm. We have dug into some of the movements here at https://coinjournal.net/ to sum up the carnage. 

Liquidations 

With violent price swings, liquidations were inevitable. Longs got caught out badly on Thursday and Friday, as the Bitcoin price fell south of $20,000. 

There were $249 million of long liquidations across exchanges on Thursday, with Friday bringing an additional $134 million. The $383 million of long liquidations was the most in any 48 hour period this year. 

Volatility

Obviously, liquidations stem from volatility. Looking at Bitcoin to dissect the extent of the movements, the volatility is now back up to levels last seen when FTX collapsed in November. 

The chart below shows that the metric had been rising steadily, before SVB going poof kicked it back up to a mark 3-Day volatility mark of 50%, last seen when Sam Bankman-Fried’s fun and games were revealed to the public.

“We have been seeing relatively muted action in the crypto markets since the FTX collapse last November” said Max Coupland, Director of CoinJournal. “The SVB event served to kick volatility back up to levels we last saw amid all the crypto scandals of last year – not only FTX, but Celsius, LUNA etc. The difference with this event is that the crash was sparked in trad-fi for a change”.

Crypto bounces back

But all is well that ends well. Or something along those lines, as despite SVB going under, the Fed announced last night, after a weekend of chaos, that all deposits at SVB would be made whole. 

The bail-out (if you can call it that, as SVB is still going under) quelled up fear in the markets that the issue could become systemic. Crypto roared back, with Bitcoin spiking back up to $22,000 at time of writing. And this time, it was shorts who got caught offside, with $150 million liquidated across the market Sunday. 

Perhaps the biggest winner of all was the world’s second-biggest stablecoin, USDC. 25% of the stablecoin’s reserves are backed by cash. Crucially, 8.25% ($3.3 billion) of reserves were (are) trapped in SVB, with the stablecoin dipping below 90 cents on several major exchanges over the weekend. 

1/ Following the confirmation at the end of today that the wires initiated on Thursday to remove balances were not yet processed, $3.3 billion of the ~$40 billion of USDC reserves remain at SVB.

— Circle (@circle) March 11, 2023

At press time, the peg has been largely restored as the crypto market bounces upward, with Bitcoin north of $24,000.  

What next for crypto?

And so, the immediate storm appears to have been weathered in cryptoland. 

Nonetheless, the past few days present as yet another crushing blow. Three of the big crypto banks – SVB, Silvergate and Signature – are now no more. These banks allowed crypto firms to offer on-ramping from fiat into crypto 24/7 through their settlement services, in contrast to the regular banking hours of the banking sector. 

Liquidity and volume thus may dip even further in the crypto market, after a year that has already seen volumes, prices and interest in the space freefall. 

Despite the Fed stepping in to shore up deposits and hence stabilising the stablecoin market and wider crypto prices, the long-term future of the cryptocurrency industry in the US has taken another heavy body blow this weekend. And with the US being the biggest financial market in the world, that is very bad news. 

Coupled with the regulatory clampdown by the SEC in the last few months, 2023 has followed 2022 in creating a more hostile and bearish environment for the sector at large. 

So crypto investors may have seen a bounceback in prices in the last few months, but this appears to be largely macro-driven correlation with the stock market, as the underlying events in the industry – regulation, more bankruptcies, and crypto-friendly banks shuttering – have not been positive. 

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The post Crypto volatility back to FTX levels, with $791 million of liquidations in 4 days as SVB collapse rocks market appeared first on CoinJournal.