Bitcoin Holds Steady Above $25,000 As Euro Banking Crisis Eases
Bitcoin held steady above $25,000 after the Swiss National Bank appeared to avert a European banking crisis by agreeing to lend troubled investment bank Credit Suisse around $50 billion, and investors’ hopes rose that the US Federal Reserve would become more dove at its next meeting.
The largest cryptocurrency by market capitalization traded at $25,050, up 3% in the past 24 hours, according to CoinDesk data. BTC has largely remained capped between $24,000 and $25,000 since Tuesday afternoon, when US inflation data took a slight turn for the better, and is up 19% on the week amid renewed market optimism about the US banking sector and that the Fed potentially suspends its current rate hike regime.
On Wednesday, the CME FedWatch Tool, a predictor of interest rate decisions, predicted a 45% chance of a zero basis point rate hike. It now forecasts an 80.5% chance of a 25 basis point (bps) increase. Both numbers are in stark contrast to last week when the CME showed a 68% chance of a 50 bps rate hike.
“BTC’s resilience since shows that while it is clear now that BTC is not an inflation hedge, it certainly is a hedge against monetary irresponsibility,” Singapore-based crypto options trading firm QCP Capital wrote in a Telegram broadcast note.
Ether (ETH), the second largest cryptocurrency by market cap, recently hovered around $1,690, up 2% from Wednesday at the same time. BNB, the initial token of the Binance-initiated blockchain network BNB Chain and the fourth-largest cryptocurrency by market capitalization, jumped 7% to trade at $328 from about $300 a day ago. Indexing Protocol The Graph’s GRT token rose by 13%.
US equities also turned green as markets continued to digest federal regulators’ backstop for depositors at Silicon Valley Bank and Signature Bank. The S&P 500, Wall Street’s benchmark stock index, recently rose 1.2%. The technology-heavy Nasdaq Composite and Dow Jones Industrial Average (DJIA) rose 1.8% and 0.7% respectively.
In a note, QCP Capital saw the move as a precursor to the Fed raising its interest rate by 25 bps.
“Anything too dovish would stoke fears in markets that the Fed knows more, while pauses would confuse the message about inflation,” QCP Capital wrote. “Central banks will continue their fight against inflation while working separately to rein in troubled financial institutions.”
