Bitcoin responds positively to banking crisis
Bitcoin jumped almost 9% yesterday and 7% on Sunday. This is in response to the confidence crisis across the US banking sector following the SVB failure. The cruptocurrency is also sensitive to front end of the yield curve repricing yields downwards.
Risk assets, including cryptocurrencies, were under pressure last week as the market worried that the Fed would hike by 50bps. That has now dissipated with the banking sector crisis. As such, risk assets are now being potentially supported.
Moreover, as prices plunged last week, short positions were initiated. These are being closed as the market discounts potential Fed policy. According to data firm Coinglass, close to $200m in shorts were closed or liquidated over the last two days (www.barrons.com).
BTCUSD's daily chart is trading in its bullish channel, between the upper blue and red bands. The longer its stays in this area, the greater the likelihood of further price appreciation. However, if its slips back down into the neutral area, between the blue bands, momentum will be waning.
The hourly chart is already showing signs of slowing momentum. Its stochastic has crossed down and has slipped under eighty. A retaking of the upper quintile will suggests that an underlying bullish momentum is present. However, if the stochastic moves towards twenty, the bullishness will be dispersing.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.