Bitcoin rises above USD 29,000, Ether recovers USD 1,900
Bitcoin fell 0.13% from April 28 to May 5 to trade at $29,197 by 8 p.m. on Friday in Hong Kong. The world’s largest cryptocurrency by market capitalization has traded below $30,000 since April 19. Ether rose 0.82% on the week to $1,914, returning to a key support level.
This week, the US Federal Reserve delivered a 25 basis point interest rate hike, bringing rates to 5% to 5.25%, the highest since September 2007.
The European Central Bank also raised interest rates by 25 basis points to 3.25% on Thursday, its seventh consecutive rate hike and a sign of more tightening ahead in the fight against inflation.
Market worries about a potential banking crisis have returned after First Republic Bank reported about $100 billion in withdrawals last month, sending its stock price plunging 45.4% last week. The bank was placed under receivership by the US Federal Deposit Insurance Corporation and was the second largest bank failure in US history, before investment banking giant JPMorgan Chase announced on Monday the purchase of the majority of the collapsed bank’s assets.
“The last 50 days of data shows that Bitcoin is bouncing on fears of banking crises, along with gold,” Nilesh Verma, crypto market analyst and founder of Crypto Granth consultancy, wrote in a Twitter reply to Discardadding that Bitcoin’s key support prices were $26,500-$27,000.
Problems with the global banking system could increase demand for Bitcoin, as it is seen as a safe haven by some investors. Bitcoin prices rose over 46% since March 10, from $19,669, when Silicon Valley Bank collapsed.
Adding to investor concerns, US President Joe Biden’s administration is pushing for a tax on crypto miners equal to 30% of the cost of the electricity they use, citing “negative spillovers” from the mining industry.
“A 30% tax will increase the cost for miners to operate,” Tom Wan, a research analyst at 21.co, the parent company of 21Shares, an issuer of crypto exchange-traded products, wrote in an email to Discard. “According to Glassnode, the current [Bitcoin] the cost of production is US$22,500. An additional cost would mean that miners would have to sell more Bitcoin they mine to sustain their business.”
“Mining pools with access to clean and cheap energy, or located outside the United States, may be less affected. But since a large percentage of mining power is located in the United States, the tax could force mining companies to relocate to another country,” Wan wrote.
The global crypto market capitalization stood at $1.2 trillion on Friday at 8 p.m. in Hong Kong, down 0.83% from $1.21 trillion a week ago, according to CoinMarketCap data. Bitcoin’s market cap of US$545 billion accounted for 47.17% of the market, while Ether’s US$230 billion accounted for 19.1%.
See related article: Crypto and NFT Market Update – May 4th
Biggest winners: FLOKI & CSPR
The FLOKI token, a dog-themed memecoin, was this week’s biggest gainer among the top 100 coins by market capitalization listed on CoinMarketCap, rising 42.4% to $0.00005199. The memecoin started its rally on Friday, the same day as Binance announced that it will list FLOKI and PEPE on the stock exchange.
Proof-of-stake blockchain Casper Network’s CSPR coin was this week’s second biggest gainer, rising 10.58% to $0.06019. The coin started its rally last Friday, the same day as Casper Labs co-founder and chief technology officer Medha Parlikar talked on making public blockchains secure for business, at the Consensus 2023 conference.
Next week: Investors await US CPI
Investors await the release of April’s US consumer price index (CPI), scheduled for May 10. The March report showed US inflation rose 5% on the year, slowing from a 6% rise in February and marking the ninth straight month of declining inflation.
The U.S. nonfarm payrolls number for April came in at 253,000, above estimates of 180,000. The April unemployment rate was 3.4%, compared with an estimate of 3.6%.
Chiliz, a blockchain company focused on Web3 products for the sports and entertainment industry, is also set to go public launch its new Layer-1 mainnet, also known as the Sports Blockchain, on May 10. The new blockchain will be compatible with the Ethereum Virtual Machine and aims to attract more developers and brands to build on Chiliz.
Crypto Granth’s Verma expects upward momentum in crypto next week.
“We are seeing this crossover for the fourth time in Bitcoin’s history. If we take Covid as an exception, this crossover gives big returns to bulls and signals an upcoming bull market,” Verma wrote, adding that Bitcoin has strong support at $25,000- 27,000 and that the chart remains bullish to a weekly close below USD 26,000.
21.co’s research analyst Wan said Bitcoin needed a weekly close above USD 32,000 to confirm an uptrend.
See related article: US reaction to crypto is like ‘deer caught in headlights,’ says ex-CFTC chief
