Bitcoin BTC price edges below $27,000 as latest banking crisis fails to trigger price rally
Bitcoin (BTC) fell below $27,000 as the latest banking debacle failed to trigger the kind of price rally that has occurred in recent weeks amid several US bank failures.
The largest cryptocurrency by market cap recently traded at around $26,950, down over 3% in the last 24 hours. BTC had hovered above $27,000 on Thursday morning before falling below the threshold around 1pm ET. BTC has been bearish for much of the past week as investors look for a new price catalyst. Bitcoin fell below $27,000 on Wednesday for the first time since March, retook the threshold before falling again.
In an email to CoinDesk, Vineeth Bhuvanagiri, CEO of Emurgo Fintech, the founder of the Cardano blockchain, noted that investors remain concerned about low liquidity, which is why “seemingly small sales tend to have a big impact on the price.”
Meanwhile, an outflow of deposits at PacWest Bancorp (PACW) that sent the Los Angeles-based bank’s share price down 22% on Thursday did not spur “strong demand for cryptos this time around,” Edward Moya, senior market analyst for currency Oanda, wrote in a Thursday note.
“Fears of bank contagion remain low as some banks such as Western Alliance show deposits are increasing,” Moya said.
Emurgos Bhuvanagir suggested that a major macro shock such as “failure to resolve the debt ceiling triggering a default” could see bitcoin’s price unwind, though he added that BTC appears to be “in an accumulation phase, meaning that “falls are being swallowed up quickly .”
In an interview with CoinDesk, Greg Cipolaro, global head of research at bitcoin-focused investment firm NYDIG, compared the market’s tenor to that during the debt ceiling crisis in 2011, “senses a little bit of the same,” Cipolaro said.
“It’s kind of the calm before the storm right now,” he said. “When we finally get into the negotiations, the ceiling will eventually be raised. There could be some market volatility around that.”
“It may be that bitcoin, as a non-sovereign-issued store of value, is seen as a valid investment option for those seeking to insulate themselves from the machinery of politicians and monetary policy setters,” he wrote in a note published on April 21.
Ether (ETH), the second largest cryptocurrency by market cap, followed a similar trend, falling over 3.5% to hover around $1,788 on Thursday. ETH fell below $1,800 for the first time since late April, according to CoinDesk data. Layer 2 blockchain Polygon’s MATIC token rallied over 4% to trade at around $.84 cents.
The CoinDesk Market Index (CMI), which measures the overall crypto market performance, fell 3.7% for the day.
Equity markets were mixed, with the S&P 500 and Dow Jones Industrial Average (DJIA) falling 0.1% and 0.6%, respectively. The technology-heavy Nasdaq rose 0.1 percent for the day.
DIRECTION (11 May 2023, 21:10 UTC): Bitcoin fell below $27,000 for the first time since March on Wednesday.
