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Bitcoin bulls

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

Jake Simmons by Jake Simmons
1 month ago
in Bitcoin
Reading Time: 2 mins read

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.

Related Reading: Banking Crisis Redux: Bitcoin Priced In First Republic Bank Shares Rockets Higher

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

— tedtalksmacro (@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.

Related Reading: Dormant Bitcoin Whales Waking Up, A Concern For BTC Price?

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 V. Straten (@jimmyvs24) 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
Tags: bitcoinbtc
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Jake Simmons

Jake Simmons

Jake Simmons has been a Bitcoin enthusiast since 2016. Ever since he heard about Bitcoin, he has been studying the topic every day and trying to share his knowledge with others. His goal is to contribute to Bitcoin's financial revolution, which will replace the fiat money system. Besides BTC and crypto, Jake studied Business Informatics at a university. After graduation in 2017, he has been working in the blockchain and crypto sector. You can follow Jake on Twitter at @realJakeSimmons.

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