Bitcoin price drops below $28,000 after Labor Day

The Bitcoin price suffered a setback today, May 2, as the price fell below the crucial $28,000 level after a solid four-month streak.

Throughout April, the alpha coin had been on an upward trajectory, experiencing its longest stretch of consecutive monthly gains since 2021.

However, the latest decline in Bitcoin’s value raises questions about the sustainability of the recent rally, leaving investors to wonder if this is just a minor hiccup or the start of a more significant market correction.

Bitcoin Price Loses $28K Handle

Bitcoin experienced a 2% drop in the last 24 hours, and its value, as reported by CoinMarketCap, fell below the $28K level, and currently at $27,974. Additionally, the 2.17% increase over the past seven days indicates Bitcoin’s ability to withstand market fluctuations and remain stable.

Source: CoinMarketCap

Nonetheless, Bitcoin’s recent 73% recovery from the 2020 crypto market crash has stalled near the $30,000 level, leaving traders anxiously awaiting new catalysts to boost the cryptocurrency’s value.

This rise has been driven by the belief that the US central bank will eventually adopt a more relaxed monetary policy and the argument that the US banking crisis has weakened confidence in fiat currency.

“The market is very nervous as it waits to see what happens with First Republic Bank,” Adrian Przelozny, head of crypto exchange Independent Reserve, told Bloomberg.

Image: India Posts

First Republic banking crisis raises fears

The collapse of Silicon Valley Bank (SVB) and Signature Bank due to massive withdrawals has raised alarm among investors and depositors, who now fear that First Republic Bank could be the next institution to fail.

In recent weeks, the bank’s wealthy depositors have transferred their funds to larger, more established institutions that are perceived as less likely to collapse.

according to The Wall Street JournalFirst Republic Bank’s depositors have withdrawn roughly $70 billion since SVB’s collapse earlier this month, sparking concerns about a potential run on deposits.

The bank’s high rate of uninsured deposits, at 68%, has raised investor anxiety, as it exceeds the FDIC’s $250,000 limit, leaving a significant portion of the bank’s funds at risk.

While federal regulators stepped in to protect SVB’s uninsured deposits because of the systemic risk it posed to the financial system, First Republic depositors are unwilling to take the same risk, fearing that their funds may not receive the same level of protection.

As a result, the bank risks a mass withdrawal of deposits, which could potentially lead to collapse and send shock waves through the financial industry.

BTC / US Dollar at $28,023 on the daily chart at TradingView.com

Historical data: Potential for continued growth in Bitcoin price

Meanwhile, according to data compiled by Bloomberg, Bitcoin price’s recent four-month winning streak through April marks the longest stretch of gains since the six-month advance through March 2021.

Over the past decade, four-month winning runs in Bitcoin have historically been associated with an average increase of 260% in the following year, indicating the cryptocurrency’s potential for sustained growth.

This historical data offers a glimmer of hope for investors who have been anxiously waiting for Bitcoin’s value to recover from its recent decline.

– Featured image from Freepik