Decentral Block Post

Bitcoin (BTC) starts a new week in an unmistakably bullish position as it passes $28,000.

Crypto markets continue to climb on the back of the banking crisis, which still rages in the United States and abroad — where will they go next?

After a week of chaos for macro markets and solid gains as a result, Bitcoin and altcoins are circling levels, which some have not seen for nine months.

The 2022 bear market is feeling like an increasingly distant memory as old resistance levels tumble and bulls attempt to cement newly-reclaimed support.

This week, as last, there are all sorts of potential hurdles to overcome — the Federal Reserve will decide on its next interest rate changes and new macroeconomic data will drop.

Bitcoin (BTC) is on track to close the week with gains of more than 23%. The banking crisis in the United States and Europe seems to have boosted buying in Bitcoin, indicating that the leading cryptocurrency is behaving as a safe haven asset in the near term.

All eyes are on the Federal Reserve’s meeting on March 21 and 22. The failure of the banks in the U.S. has increased hopes that the Fed will not hike rates in the meeting. The CME FedWatch Tool shows a 38% probability of a pause and a 62% probability of a 25 basis points rate hike on March 22.

Analysts are divided on the consequences of the current crisis on the economy. Former Coinbase chief technology officer Balaji Srinivasan believes that the U.S. will enter a period of hyperinflation while pseudonymous Twitter user James Medlock believes otherwise. Srinivasan plans to wage a millionaire bet with Medlock and another person that Bitcoin’s price will reach $1 million by June 17.

Although anything is possible in crypto markets, traders should be prudent in their trading and not get carried away with lofty targets.

Let’s study the charts of Bitcoin and altcoins that are showing signs of the resumption of the up-move after a minor correction.

Bitcoin (BTC) approached a key weekly close on March 19 with traders concerned about a retest of lower levels.

Bitcoin bulls must "step in" to protect $26,000

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD circling $27,000 on Bitstamp.

After briefly tapping $28,000 into the weekend, a slow comedown through out-of-hours trading denied bulls a squeeze higher. This led market participants to weigh the likelihood of Bitcoin returning to test support.

“Holding my long position while we are above $25,500, but ultimately we lost $27,000 support so we are likely to come down and test around $26,100,” popular trader Crypto Tony told Twitter followers.

“The key is for the bulls to absolutely step in at that moment.”

The market capitalization of Bitcoin (BTC) has added $194 billion in 2023. Its 66% year-to-date (YTD) growth vastly outperforms top Wall Street bank stocks, particularly as fears of a global banking crisis are rising.

Moreover, Bitcoin has decoupled from United States stocks for the first time in a year, with its price rising about 65% versus S&P 500’s 2.5% gains and Nasdaq’s 15% decline in 2023. 

Wall Street banks lose $100B in 2023

The six largest U.S. banks — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Morgan Stanley and Goldman Sachs — have lost nearly $100 billion in market valuation since the year’s start, according to data gathered by CompaniesMarketCap.com.

Bank of America’s stock is the worst performer among the Wall Street banking players, with a nearly 17% YTD drop in valuation. Goldman Sachs trails with an almost 12% YTD decrease, followed by Wells Fargo (9.74%), JPMorgan Chase (6.59%), Citi (3.62%) and Morgan Stanley (0.84%).

U.S. bank valuations have slid amid the ongoing U.S. regional banking collapse. That includes the announcement last week that Silvergate, a crypto-friendly bank, was closing its doors, followed by regulators' subsequent takeover of Signature Bank and Silicon Valley Bank.

The total crypto market capitalization increased by 26% in seven days, reaching $1.16 trillion on March 17. Bitcoin (BTC) was the biggest winner among the top 20 coins, up 31.5%, though some altcoins gained 50% or more during that period.

The surge in cryptocurrency prices occurred as the United States Federal Reserve was forced to lend banks $300 billion in emergency funds. According to PBS News Hour, nearly half of the money went to failed financial institutions Silicon Valley Bank and Signature Bank and was used to pay uninsured depositors. The remaining $153 billion was obtained through a long-standing program known as the "discount window," which allows banks to borrow funds for up to 90 days.

While appearing to protect the banking sector, additional funding for the Federal Deposit Insurance Corporation (FDIC) and credit facilitation using Fed resources ultimately creates a "false sense of confidence," according to activist billionaire investor Bill Ackman.

The $30 billion plan devised by U.S. regulators to avoid a major liquidity crisis in First Republic Bank (FRB) "raised more questions than it answers," said Ackman, who manages the hedge fund Pershing Square. Furthermore, Ackman stated that "half measures don't work when there is a confidence crisis."

Warren Buffett, the billionaire, is on the losing side of the bet

As the banking crisis worsened, Warren Buffett, the largest shareholder and co-founder of Berkshire Hathaway (BRKB), a $650 billion financial conglomerate, saw his holdings rapidly deteriorate. Berkshire Hathaway, for example, is the largest holder of Bank of America (BAC) stock, which has fallen 15.5% year-to-date. This position alone has cost Buffett's investment vehicle $5.2 billion.

Bitcoin (BTC) hit new nine-month highs on March 17 as the latest events in the growing United States banking crisis boosted crypto markets.

Banking crisis volatility sees $27,000 BTC price

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting $27,025 on Bitstamp before consolidating.

At the time of writing, the pair circled $26,500 with volatility ongoing after the Wall Street open.

A catalyst for fresh upside had come in the form of the Federal Reserve’s balance sheet data overnight, this showing almost $300 billion being injected into the economy as part of the banking crisis response.

The event effectively undid months of liquidity removal under the Fed’s quantitative tightening (QT), and commentators were quick to call the restarting of the opposite phenomenon — quantitative easing (QE).

In 2023, Bitcoin (BTC) and Cathie Wood's Coinbase (COIN) investment are finally outperforming Warren Buffett's popular "crypto bet" in Brazil's fintech giant Nubank (NU). 

Bitcoin vs. crypto-exposure stocks NU, COIN

As of March 17, Bitcoin's price is up nearly 55% year-to-date (YTD). In comparison, Nubank has risen by only 26%. Meanwhile, another crypto-exposure asset, namely Coinbase stock (COIN), has seen the biggest rebound of the three, rising over 100% YTD. 

Nevertheless, Buffett's investment has fared better than COIN over the past 12 months.

As of March 17, NU is down 38% year-over-year compared to COIN's 61.76%, nearly equal to Bitcoin's 37% losses in the same period.

Warren Buffett sticks by his neobank investment

Buffett's investment firm Berkshire Hathaway purchased $1.50 billion worth of class-A Nubank stock in two separate rounds in July 2021 and February 2022.

The rejection that followed Bitcoin's (BTC) rally to $26,500 may appear to be a victory for bears, but $24,750 on March 14 was the highest daily close in nine months. Furthermore, Bitcoin has gained 26.5% since March 10, when the California Department of Financial Protection and Innovation shut down Silicon Valley Bank (SVB).

The recent price increase could be attributed to various factors, including the extraordinary $25 billion funding by the Federal Reserve and the United States Treasury on March 12, which reduced banks' systemic risks. Nonetheless, Bitcoin bulls are well positioned to profit up to $440 million when weekly options expire on March 17.

How Silicon Valley Bank triggered a stablecoin bank run

Before its downfall, SVB's total assets surpassed $200 billion, placing it among the top 20 financial institutions in the United States. Nonetheless, the most direct impact on the cryptocurrency market was the $3.3 billion deposit from Circle's USD Coin (USDC) stablecoin reserves. USDC's net redemptions totaled $3 billion between March 13-15, as the stablecoin traded below parity.

Signature Bank (SI), closed down on March 12 by the New York Department of Financial Services, added to the negative pressure on crypto markets. Silvergate was more important to the crypto industry because it provided services to many crypto-related businesses, including Coinbase, Celsius and Paxos.

This movement may explain why the $1.2 billion Bitcoin weekly options expiry on March 18 will almost certainly benefit bulls. However, a drop in commodity prices, particularly for oil, could have an impact on cryptocurrencies.

Bitcoin (BTC) accounts for more of the total value of all cryptocurrencies than at any time since June 2022.

In the latest knock-on effect from this week’s surge above $26,000, data from TradingView shows that Bitcoin market cap dominance is nearing 46% — its highest in nine months.

New dominance “spike” hints at trend change to come

Up almost 3% since the weekend alone, Bitcoin dominance shows a trend-setting move by the largest crypto asset reminiscent of classic bull cycles.

“Every Bitcoin bull market has commenced with a spike in BTC dominance (as has every bear market),” markets commentator Tedtalksmacro noted on March 15.

An accompanying chart showed that such dominance “spikes” tend to precede significant trend shifts in BTC price action.

Bitcoin (BTC) rebounded for a fresh challenge of $25,000 on March 16 ahead of a key interest rate decision in Europe.

Credit Suisse stock up 40% after “decisive action”

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD gaining almost $1,000 versus overnight lows of $24,229 on Bitstamp.

The pair remained buoyant as news hit that Switzerland’s central bank was due to inject $50 billion Swiss francs ($53.8 billion) into the embattled Credit Suisse, shares of which added 40% on the day.

“These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders,” CEO Ulrich Koerner stated in a press release.

While averting potential catastrophe, the move came in for criticism ahead of a day full of economic maneuvers in Europe and the United States.

The previous six months should have been extremely beneficial to Ether's (ETH) price, especially after the project's most significant upgrade ever in September 2022. However, the reality was the opposite: between September 15, 2022, and March 15, 2023, Ether underperformed Bitcoin (BTC) by 10%.

The price ratio of 0.068 ETH/BTC had been holding since October 2022, a support that was broken on March 15. Whatever the reason for the underperformance, traders currently have little confidence in placing leverage bets, according to ETH futures and options data.

But first, one should consider why Ether's price was expected to rise in the previous six months. On September 15, 2022, the Merge, a hard fork that switched the network to a proof-of-stake consensus mechanism, occurred. It enabled a much lower, even negative, coin issuing rate. But, more importantly, the change paved the way for parallel processing that aimed to bring scalability and lower transaction costs to the Ethereum network. 

The Shapella hard fork, expected to take effect on the mainnet in April, is the next step in the Ethereum network upgrade. The change will allow validators who previously deposited 32 ETH to enter the staking mechanism to withdraw in part or in full. While this development is generally positive because it gives validators more flexibility, the potential 1.76 million ETH unlock is a negative consequence.

However, there is a cap on the number of validators that can exit; therefore, the maximum daily unstake is 70,000 ETH. Moreover, after exiting the validation process, one may choose between Lido, Rocket Pool, or a decentralized finance (DeFi) application for yield mechanisms. These coins will not necessarily be sold at the market.

Bitcoin (BTC) kept bears sweating near $25,000 on March 15 as encouraging macroeconomic data combined with concerns over banking crisis contagion.

PPI offers "great signs" on Fed pivot

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD recovering from a 24-hour comedown to see highs of $25,273 on Bitstamp.

The pair reacted positively to the latest United States producer price index (PPI) data, which came in far lower than expected.

Prior to the release, the Binance order book showed principal bid and ask liquidity parked at $22,000 and $26,000, respectively.

“Time will tell if enough bid liquidity is there to insulate $22k from getting hit,” on-chain monitoring resource Material Indicators wrote in part of accompanying commentary while uploading the data to Twitter.

Bitcoin (BTC) is setting up a classic trading move, which could see it hit $100,000, one analyst says.

In a tweet on March 14, Charles Edwards, founder and CEO of investment firm Capriole, called BTC price action in 2023 a “bump & run reversal.”

Edwards on BTC price: The “bottom is back”

Having passed $26,000 to hit new nine-month highs this week, BTC/USD is in the midst of a recovery rarely seen before.

Despite cooling under $25,000 at the time of writing, longer timeframes are already getting analysts excited after the brutal 2022 bear market.

For Edwards, Bitcoin in 2023 has been straight out of the market’s textbooks. The largest cryptocurrency is attempting to fulfill a “bump and run reversal pattern,” he believes.

Bitcoin (BTC) received a substantial boost this week as United States inflation levels for February were in line with market expectations. On March 14, the BTC/USD pair surged to a 2023 peak at $26,550 after the news.

But, while the macroeconomic conditions may currently favor risk-on buyers, certain on-chain and market indicators hint at a potential correction in the near term.

BTC flows back to exchanges as price rises

On March 13, Glassnode’s exchange flow data recorded the most significant inflow to exchanges since May 2022. This means more supply on exchanges and potentially higher selling pressure.

The coin days destroyed indicator, which measures the time-weighted transfers of Bitcoin, also shows a small spike, indicating that old hands are moving coins. The indicators might signal profit booking by long-term holders, which can lead to a correction.

Bitcoin funding rates, RSI jump

Moreover, the funding rate for Bitcoin perpetual swaps is also elevated with the latest Consumer Price Index print. In other words, more traders are betting on the upside with leveraged positions, increasing the risk of a correction.

The price of Bitcoin (BTC) increased by 28% between March 12-14, reaching $26,500, its highest level since June 2022. Some may attribute the gains to the consumer price index's (CPI) 6% year-over-year increase in February, even though the figure was in line with expectations.

The inflation metric reached its lowest level since September 2021, which is a positive development, but it does not validate the Federal Reserve's attempt to reduce the metric to 2%. Most likely, risk markets, such as stocks and cryptocurrencies, soared after regional bank stocks recovered from their March 13 lows.

At 10:30 a.m. Eastern Time, First Republic Bank (FRC) shares were trading 54% higher, followed by Western Alliance Bancorporation (WAL) gaining 46% and KeyCorp (KEY) gaining 15%. The 30-year average mortgage rate decreased to 6.6% from 7.1% on March 7. Consequently, reduced mortgage rates have the potential to improve the housing market, which partially explains the rally.

The unexpected decline in mortgage rates may present an opportunity for price-sensitive homebuyers and homeowners waiting for a chance to lock in a lower rate. According to data from Realtor.com, a buyer of a median-priced home still faced a monthly mortgage payment that was 49% higher than it was one year prior.

Despite the possibility of a recession in the United States due to high interest rates, China's economic outlook remains positive. Li Qiang addressed reporters on March 14 for the first time since assuming the position that oversees the State Council, China's highest executive body. According to Qiang, non-state-owned enterprises in China will have greater room for development. 

Bitcoin (BTC) eyed key resistance near $25,000 on March 14 as markets awaited key economic data from the United States.

Hopes CPI will bring Bitcoin “consolidation”

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD making monthly highs of $24,917 on Bitstamp overnight.

The pair remained buoyant after the impact of multiple U.S. bank closures sent crypto markets skyrocketing.

Now, all eyes were temporarily on the Consumer Price Index (CPI) print for February when it came to short-term BTC price action.

A classic crypto volatility catalyst in itself, last month, CPI showed an unwelcome slowdown in inflation abating; this, in turn, gave rise to fears that the Federal Reserve would keep interest rates higher for longer.