Bitcoin Price Threatens $28K Support As Pre-FOMC Mood Boosts US Dollar
Bitcoin (BTC) moved toward $28,000 support after Wall Street opened on May 1, as markets digested fresh U.S. banking woes.
This increases suspicions of contamination from the First Republic
Data from Cointelegraph Markets Pro and TradingView showed that BTC/USD fell to multi-day lows at the time of writing.
The pair continued a comedown that began after the weekly and monthly candle closed, shedding over $1,000 since then.
The start of the week saw a potential volatility catalyst during trading in Asia as First Republic Bank was sold to JPMorgan Chase by the US government.
Amid suspicions about the legitimacy of the move, First Republic became the second largest bank failure in US history.
Bitcoin showed little interest in mimicking its reaction to the start of the banking crisis in March, instead tracking lower despite warning signs that another lender may already be in trouble.
This came in the form of PacWest Bancorp, whose stock, PACW, saw a 7% drop on the day to return to its lowest levels in a month.
For Marty Bent, founder of crypto media company TFTC, the behavior was “eerily similar” to First Republic. PACW was down nearly 60% year-to-date on the day, while FRC, now suspended indefinitely, had plunged 97%.
Despite the turmoil and potential looming continuation, US stocks were calm at the open, leaving crypto markets at the more volatile end of the risk asset spectrum.
Traders reacted and weighed the possibility of a fall ahead of the Federal Reserve’s decision on interest rates on May 3.
This was nevertheless already highly priced in by the markets, which expected an increase of 0.25% as a near certainty despite the banking fragility. Data from CME Group’s FedWatch Tool pegged the probability at 94% on the day.
Dollar strength faces ‘big week’
Meanwhile, one asset that showed strong strength to start the week was the US dollar, with the US Dollar Index (DXY) challenging its highest levels since mid-April.
Related: The Second Biggest US Bank Failure – 5 Things to Know in Bitcoin This Week
“A big week is coming, especially for the US dollar. Expect defensive positioning leading into Wednesday,” financial commentator Tedtalksmacro wrote in part of the analysis.
He argued that markets should not “expect” the Fed to hint at a pivot or freeze in rate hikes at this week’s meeting, which in itself boosts dollar and risk-on sentiment.
An earlier thread flagged key correlations for observers, these including DXY versus BTC.
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