Bitcoin Holds Near $29K As Investors Weigh Rate Hikes, Bank Contagion
Bitcoin (BTC) spent much of Thursday hovering quietly just below $29,000, roughly where it has been for much of the past 10 days, as investors weighed interest rate hikes by the U.S. and European central banks and the latest debacles in a simmering banking crisis.
The largest cryptocurrency by market capitalization recently traded at around $28,800, down 0.3% in the past 24 hours, according to CoinDesk data. BTC crashed below $29,000 on Thursday morning as US stock markets opened, staying between $28,700 and $29,000.
Ether (ETH), the second-largest cryptocurrency by market capitalization, followed a similar pattern, changing hands around $1,877, down 0.6% from the same time on Wednesday. Prices of major cryptos were little changed during the day. Litecoin’s LTC token recently traded almost flat at around $87.8 while Solana’s SOL token rallied about 0.8% to $21.70.
The CoinDesk Market Index (CMI), which measures the overall performance of the crypto market, was up 0.3% for the day.
Stock markets struggled with the S&P 500, Wall Street’s benchmark stock index, closing down 0.7% on Thursday. The Dow Jones Industrial Average (DJIA) and technology-heavy Nasdaq Composite fell 0.8% and 0.4% respectively.
Shares of several regional banks fell, including those of Los Angeles-based PacWest Bancorp ( PACW ) which fell 50% Thursday afternoon and Phoenix-based Western Alliance Bancorporation ( WAL ) fell 38%. Investors worried about contagion in the banking sector, which began in mid-March with the collapse of three banks, including Silicon Valley (SVB) and Signature.
PacWest is considering its options, including a possible sale. Western Alliance denied a report that it is for sale.
In bond markets, the benchmark two-year Treasury yield – a measure of near-term interest rate expectations – fell 15 basis points to 3.78%, near its lowest mark this year. The 10-year Treasury yield also fell about 2 basis points to around 3.37%.
“The financial crisis that we seem to be going through in our sleep will almost certainly become real,” wrote Anthony Georgiades, co-founder of decentralized layer 1 blockchain Pastel Network, in an email to CoinDesk.
“The banks will struggle even more now given that the yield curves are so incredibly inverted,” he said. “And ultimately this will probably force [U.S. Federal Reserve] into urgent rate cuts and a return to something akin to quantitative easing – otherwise the economy and banking itself will be in deep, deep trouble.” He added that the latter scenario could strengthen BTC.
Edward Moya, senior market analyst for Oanda, wrote in a Thursday note that BTC “isn’t seeing the same amount of flows as it did early on during all the banking drama with SVB.”
“It’s going to be very ugly for the financial sector, and it should spell trouble for the broader economy,” Moya wrote. “Bitcoin appears to be anchored until it gets regulatory clarity.”
