Bitcoin BTC Price Rises Above $28.5K As Investors Weigh New Bank Troubles, Cool Jobs Data
Bitcoin (BTC) rose in U.S. trading on Tuesday as investors reflected on the latest bank crisis and appeared to regain interest in crypto and other assets that hold value.
The largest cryptocurrency by market capitalization recently traded at around $28,775, up about 2.6% in the past 24 hours, according to CoinDesk data. BTC’s price had hovered around $28,000 for most of the past day before plunging early Tuesday after shares of two regional banks, Los Angeles-based PacWest Bancorp (PACW) and Phoenix-based Western Alliance Bank (WAL), fell 27% and 15%, respectively Meanwhile, the latest Job Openings and Labor Turnover Survey (JOLTS) came in weaker than expected.
The failure of four American banks, including First Republic earlier this week, have impacted the economy but appeared to strengthen crypto prices. The tepid jobs data suggested the economy was weakening and inflationary pressures could ease, another potential boon for digital assets.
Ether (ETH), the second largest cryptocurrency by market capitalization, also rose higher by 2.5% to change hands at around $1,877. The CoinDesk Market Index (CMI), which measures the overall performance of the crypto market, was up over 2% for the day.
Shares heading south during Tuesday’s close, with the S&P 500 trading down 1.1%. Both the Dow Jones Industrial Average (DJIA) and tech-heavy Nasdaq Composite fell about 1%.
In the bond markets, the yield on the 2-year government bond – a measure of near-term interest rate expectations – fell 16 basis points to around 3.94%. The yield on the 10-year Treasury note also fell by about 14 basis points to 3.42%.
An April survey of 37 investors by CoinShares found that 64% believe the Fed has made a policy mistake, while another 22% said “not yet,” suggesting it’s “quite possible the Fed could make a mistake in the near future,” according to CoinShares.
The study also found that despite a flurry of regulatory actions during the first quarter of the year, the weighting of digital assets in portfolios has risen to around 1.6%, up from 0.7% in October.
Ethereum remains the preferred asset, a finding that is little changed from the previous survey in January. “This is encouraging to have weathered uncertainty around the Shapella upgrade,” CoinShares said.
Meanwhile, fund managers believe that BTC and ETH offer the most compelling growth prospects and that appetite for altcoins is less, the survey said.
“Should the economy weaken further (risk-off) this would hurt ETH, causing ETH to underperform to the downside,” Greg Magadini, director of derivatives at crypto analytics firm Amberdata, noted in a recent newsletter. “A recession will cause the Fed to swing and cut interest rates later this year (good for gold and BTC).”
Magadini said BTC should continue to outperform and increase market share.
