2nd Largest US Bank Failure – 5 Things to Know in Bitcoin This Week
Bitcoin (BTC) starts another week digesting major macroeconomic news as the US sees the second largest bank failure in its history.
After a sideways weekend, BTC/USD was already volatile in the new weekly and monthly candle when the downside started.
After staying below $29,000, BTC price action is already facing more potential pressure as First Republic Bank is placed into receivership and taken over by JPMorgan Chase.
The move, announced during trading in Asia but before Wall Street opened, comes ahead of an already heavy week in which the Federal Reserve will unveil its next interest rate move.
With a lot to take in, the potential for continued surprises in the crypto markets is clearly evidenced.
Cointelegraph takes a look at these risks and more in its weekly overview of crypto, and specifically Bitcoin, price triggers.
BTC price volatility increases flat monthly close
Classic flash volatility followed Bitcoin’s segue into a new weekly and monthly candle after April finished sideways.
After ending the month at $29,300, BTC/USD quickly dived lower as bid liquidity was pulled from the Binance order book.
This, noted monitoring resource Material Indicators, was responsible for delivering local overnight lows of $28,289 on Bitstamp, as tracked by data from Cointelegraph Markets Pro and TradingView.
Bitcoin thus reached “bounce” targets for some, including Michaël van de Poppe, founder and CEO of trading firm Eight, who noted potential strength in the return of altcoin markets.
“Bitcoin failed to hold $29,200 after several tests. Hit $28,300 for a bounce play. Good deal; Altcoins bounce more firmly,” he in summary on the day.
The day before, Van de Poppe had warned that without a $30,000 retracement, Bitcoin would not be able to continue its uptrend, while correctly predicting the eventual reversal level.
Popular trader Crypto Tony, meanwhile, confirmed that he was waiting for $28,300 support to prove himself before taking a position.
The same level was also important to other traders, including Ninja, while Sun Tzu agreed that without a clear break into the $30,000 zone, the odds for extended downside remain.
“We are still extending within this key resistance zone,” he told Twitter Followers May 1st.
“As always, never assume a resistance is going to be broken until it happens, as the risk reward ratio for longs is quite low. The plan remains the same, unless we break $31,000.”
JPMorgan takes over First Republic Bank in second largest US bank failure
In stark contrast to last week, macroeconomic events will take center stage in the coming days as the Federal Reserve meets to decide on interest rate changes.
Despite being highly priced in by the markets, the upcoming 0.25% hike, which will be announced at the May 3 Federal Open Market Committee (FOMC) meeting, is still not guaranteed.
The picture remains complex. The Fed is moving into growing signs of a deepening recession, while a more pressing danger comes in the form of the lingering banking crisis from March.
Effective May 1, First Republic Bank (FRC), whose shares plunged 75% in April alone, will be placed into public receivership by the US Federal Deposit Insurance Corporation (FDIC). Lenders including PNC Financial Services Group, JPMorgan Chase & Co. and Citizens Financial Group Inc. were among the banks that bid for FRC, and JPMorgan eventually took over.
Reports previously indicated that the deal should have been completed and announced before the start of Asia trade, but this took longerwill be announced at approx. 08:00 UTC.
As a sense of anticipation hangs in the air, attention is focused on the Fed, which risks confusing the banking sector even more with a further rate hike under current circumstances.
As Arthur Hayes, former CEO of crypto trading giant BitMEX, warned late last month, the US may be caught between a rock and a hard place.
“Look for the Fed to fix this problem by freezing a larger portion of US bank balance sheets. Money printer go brrr,” part of the Twitter activity read April 29, where Hayes reiterated a now-famous long-term BTC price target of $1 million.
Bets on the Fed following through on the expected hike rose on the FRC news, with markets seeing a 90% chance of 0.25%, according to data from CME Group’s FedWatch Tool.
For Bitcoin traders, meanwhile, the FOMC event itself marks a potential price turning point.
“It seems that Bitcoin again became a stablecoin, this time around $29200. Obviously because of the weekend, but I think it will stay relatively stable like this until Wednesday,” says popular trader Jackis predicted before the end of the month.
“On Wednesday we have the FOMC meeting, a highly anticipated event that is going to be the perfect impetus.”
FOMC days tend to trigger volatility across crypto markets, although they are often short and characteristic of a “fakeout” as bid and sell liquidity is taken before prices return to previous levels.
April still beats February Bitcoin price performance
Despite current cold feet over BTC price strength, April managed to avoid receiving the title of worst month of 2023.
Data from monitoring resource Coinglass shows that the total return for BTC/USD was 2.8%.
These beat February, which produced no significant gains at all, while maintaining Bitcoin’s “green” record for the year so far.
On weekly timeframes, however, the picture looks less appetizing, with consolidating weekly candles underscoring the stubborn nature of $30,000 resistance.
Some remained bullish, with popular Twitter account Mickybull Crypto dismissing weekend price action as a standard chart feature.
“This price action happens most weekends. Note: a key to proper TA is being able to identify what happened, what is happening and what is likely to happen,” part of a tweet read on 1 May.
“Meanwhile, BTC’s weekly and monthly candle closes are bullish.”
Transactions in the chain challenge records
Under the hood, activity on the chain tells a compelling story of Bitcoin growth during the 2023 comeback.
Recorded by chain analytics firm Glassnode among others, the daily transaction count for Bitcoin is approaching all-time highs after this year saw an “explosive” increase.
In a Twitter thread Examining the overall strength of the BTC price rally, Glassnode recognized that on-chain volume had yet to match it.
“The number of Bitcoin transactions, address activity, inscriptions and Mempool congestion are all elevated. As is the degree of HODLing, and supply acquired below $30k,” it commented.
“That conviction remains. However, the rally is still young and the volumes on the chain have not picked up into support…yet.
An accompanying chart showed unused realized price divided by different market cohorts.
Glassnode’s lead chain analyst Checkmate remained bullish on Bitcoin continuing its rally, with the late-2022 low marking a local bottom.
“Best estimate –> Uptrend justified, and floor most likely in,” he wrotewhich summarizes the latest research.
“But new capital inflows are limited, and remain dominated by the existing owner base. So expect a bumpy road, with traders having increasing leverage on low timeframes and liquidity. Likely a macro-hate disbelief rally, also carrying out a lot of lettuce-handed bulls along the way.”
Crypto market greed flip-flops near multi-year highs
While the price has faltered, crypto market sentiment has crept higher after a dip in late April.
Related: Bitcoin Price Could ‘Easily’ Reach $20K In Next 4 Months – Philip Swift
The latest readings from the Crypto Fear & Greed Index show that market “greed” is trending back towards levels last seen at Bitcoin’s $69,000 all-time high in November 2021.
A lagging indicator, fear and greed nevertheless shows how easily sentiment is currently affected by relatively small market changes.
This again reiterates the importance of current resistance levels for Bitcoin and Ethereum in particular, with both assets facing key lines in the sand – $30,000 and $2,000 respectively.
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
