Bitcoin Price Reclaims $29,800, Driven By These Factors

Jake Simmons

Last Updated: June 11, 2024 2:35 pm

2 mins read

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The Bitcoin price regained the $29,000 mark today for the first time since last Thursday. The decisive impulse was provided yesterday by the news that with First Republic Bank the next big bank in the US is about to be seized by the US Federal Reserve and FDIC.

As was the case after the collapse of Silicon Valley Bank, the news triggered a rally for Bitcoin that initially catapulted the price above the crucial $27,800 resistance level before a brief consolidation and then continuation of the price surge took place.

With the reaction, Bitcoin is strengthening its digital gold narrative. As analyst James V. Straten predicts, the correlation between Bitcoin and gold will continue to increase as interest rates remain high and weak banks are purged. Even on a 30-day rolling average, the correlation stands at 57%, its highest level in almost 2 years.

Bitcoin 30-day rolling correlation with gold has surged since March and now stands at 57% – its highest level in almost 2 years.#BTC #Gold #correlation pic.twitter.com/l7N5eYAgEl

— Kaiko (@KaikoData) April 26, 2023

More Reasons For The Bitcoin Rally

Another reason was presented by analyst James Choi, who believes that the market is front-running the US Federal Reserve (Fed). According to Choi, the second wave of bank failures, led by First Republic Bank, will cause the Fed to pump more liquidity into the financial system. The “market is a liquidity junkie and already pricing this in.”

As Bitcoinist reported today, the M2 money supply has fallen to a historic 90-year low. Every time money has been slashed to this extent in the history of the United States, there has been a recession and banking crisis.

Popular analyst Ted (@tedtalksmacro) agrees. According to him, liquidity has been the indicator that has led the Bitcoin price in recent weeks, while most data has lagged.

1/ While most data is lagging, what tends to lead price is monetary + fiscal liquidity…

Let's quickly investigate whether liquidity has peaked or if new highs are to come👇 pic.twitter.com/PXgFv47xU6

— ted (@tedtalksmacro) April 25, 2023

According to him, the BTC price rise since mid-March is due to increased global liquidity, specifically: the US debt ceiling, with which the Treasury is drawing on its cash reserves; the banking crisis, which led to the expansion of the Fed’s balance sheet; and the stimulation of the Chinese economy through loose monetary policy after the end of Zero-Covid.

From a technical perspective, liquidation of shorts in the futures market and funding rates once again played a role in the price move. Bitcoin perps had started to go negative while open interest was rising slightly. As a result, there was a short squeeze, as Straten notes.

#Bitcoin perps have started to go negative, while open interest increases slightly, time for a short squeeze. pic.twitter.com/6O00Kt3BB2

— James Van Straten (@jvs_btc) April 26, 2023

Renowned trader @52skew, meanwhile, noted, “$BTC Binance Market CVDs & Delta: Most of this bounce was unwinding in shorts, however large binance spot buyers came in before price could roll over leading to another squeeze.” Even after the move above $29,000, shorts which were liquidated are piling up.

$BTC Binance Open Interest
Those revenge shorts are starting to get squeezed here

Funding even more negative than earlier lol https://t.co/5Ool5mWmNP pic.twitter.com/KPpFecZXae

— Skew Δ (@52kskew) April 26, 2023

At press time, the Bitcoin price traded at $28,865, eyeing the next resistance level at $30,000.

Bitcoin price BTC USD — BTC price, 4-hour chart | Source: BTCUSD on TradingView.com

Featured image from iStock, chart from TradingView.com

Jake Simmons

Jake Simmons, a dedicated crypto journalist, has been passionate about Bitcoin since 2016 when he first learned about it. Through his extensive work with NewsBTC.com and Bitcoinist.com, Jake has become a trusted voice in the crypto community, guiding newcomers and seasoned enthusiasts alike towards a deeper understanding of this dynamic field.

His mission is simple yet profound: to demystify Bitcoin and cryptocurrencies and make them accessible to everyone.
With a professional career in the Bitcoin and crypto scene that began right after graduating with a degree in Information Systems in 2017, Jake has immersed himself in the industry. Jake joined the NewsBTC Group in late 2022. His educational background provides him with the technical prowess and analytical skills necessary to dissect complex topics and present them in an understandable format. Whether you are a casual reader curious about Bitcoin or an investor seeking to navigate the latest market trends, Jake’s insights offer valuable perspectives that bridge the gap between complex technology and everyday usage.

Jake is not just a reporter on technological trends; he is a firm believer in the transformative potential of Bitcoin over traditional fiat currencies. To him, the current financial system is on the brink of chaos, propelled by unchecked government actions and flawed Keynesian economic policies. Drawing from the principles of the Austrian school of economics, Jake views Bitcoin not merely as a digital asset but as a crucial step towards rectifying a failing monetary system. His libertarian views reinforce his stance that just as the church was separated from the state, so too should money be freed from governmental control.

For Jake, Bitcoin represents more than just an investment; it's a peaceful revolution. He envisions a future where Bitcoin fosters a sustainable and responsible financial framework for generations to come. His advocacy is not about opposition but about evolution, about laying the groundwork for a system that prioritizes transparency and equity over secrecy and inequality.

As a journalist, Jake’s articles are crafted with the precision of a scholar and the passion of a true believer. He provides not only news but also thoughtful analysis that connects the dots between daily developments and larger economic theories. His work is a beacon for those lost in the technical jargon often associated with crypto discussions, illuminating the practical implications and benefits of these technologies.

In summary, Jake Simmons is not just reporting on a revolution; he wants to be part of it, fully committed to enhancing public understanding and adoption of Bitcoin and cryptocurrencies. His work is more than just a collection of articles; it’s a resource, a guide, and a companion for anyone ready to explore the potential of this digital frontier. Whether you are taking your first steps into crypto or are a veteran looking to stay on top of the latest trends, Jake’s insights provide clarity and foresight in an often unpredictable industry. Join him on this journey to reshape the world of finance, one post at a time.

You can engage with his latest takes on Twitter: @realJakeSimmons.

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