- Bitcoin price surges above $28K, breaking its losing streak.
- Rally driven by concerns over the banking sector and potential liquidity injections.
After five days of struggling below $28,000, Bitcoin experienced a surprising upswing, lifting much of the market along with it. The largest cryptocurrency by market capitalization was recently trading above $28,300, up about 3.7% over the past 24 hours. The cause of the surge remains unclear.
Bitcoin’s price started rising less than a day after the troubled First Republic Bank reported losing $100 billion in deposits during its first quarter earnings presentation on Monday, reigniting concerns about the banking sector’s stability. Last month, cryptocurrencies gained ground amid a series of U.S. regional banking collapses, as investors sought refuge in assets that retain their value.
Banking Sector Concerns Drive Bitcoin’s Rally
With First Republic Bank appearing like it could go under, I suspect the market is anticipating even more liquidity injections to support what seems to be an American banking sector still very much in crisis,
said Jake Boyle, director of Caleb & Brown, a retail crypto brokerage.
Bitcoin, as a result, is front-running these expectations. Cracks in the financial system are growing, even if relatively subtly at the moment, and it’s going to be incredibly difficult for the Fed to stick to its tightening regime moving forward.
Boyle added that Bitcoin’s recent rally is more linked to liquidity injections and rising expectations that the Fed’s tightening will likely have to end soon, or else even greater turbulence in the banking sector could ensue.
Short Squeezes and Technical Indicators
Data from analytics firm Coinglass showed that around $11.3 million of BTC short positions had been liquidated since 4 p.m. Historically, short squeezes have tended to accelerate price jumps. Ether was recently trading at around $1,870, up 1.8% from the same time on Monday.
Other major cryptocurrencies were mostly in the green, with SOL, the native token of the Solana blockchain, and ADA, the native cryptocurrency of the Cardano smart contracts platform, both recently rising more than 3%.
Technical analyst Glenn Williams pointed out that at least two technical indicators were foreshadowing a Bitcoin rebound. Williams observed that BTC’s recent decline coincided with an expected drop in momentum but also with a move towards the lower end of the Bollinger Band.
Bollinger Bands map an asset’s 20-day moving average and calculate two standard deviations above and below the average. An asset’s price is expected to stay within two standard deviations of the average 98% of the time, so a breach above or below is significant. Williams wrote that
Bitcoin approaching the lower range of its Bollinger Bands raises questions about its near-term path, but given recent history, technical analysts could expect BTC prices to advance, albeit methodically, back to their 20-day average.