Bankruptcy of First Republic Bank; Should we wait for the increase in Bitcoin price volatility?

While many analysts were worried about the impact of a possible interest rate hike on the spread of the US banking crisis, with the announcement of the bankruptcy of First Republic Bank, the current macroeconomic conditions seem to be against the upward trend of the Bitcoin price.

After a relatively stable weekend, Bitcoin seems to have started its new weekly and monthly candlestick with a lot of volatility as the downtrend begins, according to Cointelegraph.

Following the seizure of First Republic Bank by US regulators and its handover to JP Morgan Chase, Bitcoin price now appears to be facing more potential selling pressure after stabilizing below the $29,000 level.

The news of the move came during trading in Asian markets ahead of Wall Street’s open, at the start of a week during which the Federal Reserve will announce a change in interest rates.

With these events in mind, it is clear that we will continue to see surprises in the cryptocurrency market.

The end of last month’s stable trend, with the start of Bitcoin price volatility

It seems that the end of April (April) and the beginning of the new weekly and monthly bitcoin candles have been accompanied by the classic extreme fluctuations of this digital currency.

While the monthly candle closed at a price of $29,300, but with the withdrawal of buyers’ liquidity from the Binance order book, the price of Bitcoin entered a downward trend.

According to the data of Material Indicators, this incident caused the daily price of Bitcoin to reach a low of $28,289 on the Bitstamp exchange.

For some analysts, Bitcoin has reached the target price of its recent jump; Among them, Michaël van de Poppe, the founder and CEO of the trading company Eight, who in analysis He has mentioned the possibility of the return of strength to the altcoins market. He wrote:

After several attempts, Bitcoin could not stay at the level of $29,200 and once again fell to the range of $28,300. The good news is that this will cause altcoins to grow even more.

Van de Pape warned yesterday that Bitcoin cannot continue its upward trend without recapturing $30,000, and he correctly predicted a return from this level.

At the same time, the popular trader Crypto Tony (Crypto Tony) confirmation Kurd is waiting for the price to reach the $28,300 support before opening his trading position.

This level was also important for other traders including Ninja. Sun Tzu also He noted that without a definitive break of the 30,000 resistance, the possibility of price declines will still exist. He told his followers on Twitter:

We are still moving in the important resistance area of ​​$30,000. As always, since the risk-reward ratio has been low for a long time, never assume that a resistance will be broken when the price reaches that level. The current situation will not change unless Bitcoin crosses $31,000.

Bankruptcy of First Republic Bank and its acquisition by JP Morgan

Unlike last week, the US Federal Reserve meeting to decide on interest rate changes will be the most important macroeconomic event in the coming days.

Despite market predictions, it is still unclear whether we will see a possible 0.25 percentage point increase in the interest rate at the May 3 (May 13) meeting of the Federal Open Market Committee.

The current situation is complicated. While we have seen the continuing threat of a banking crisis since March, it seems that the Federal Reserve will raise interest rates despite growing signs of domestic recession in the United States.

After the 75% fall in the value of First Republic Bank’s shares in April alone, this bank was handed over to the Federal Deposit Insurance Company for liquidation. Institutions including JP Morgan Chase, Citizen Financial Group and PNC Financial Group were among the banks that offered to buy this First Republic. Eventually, the bankrupt bank was handed over to JP Morgan.

The previous report indicated that this deal should be finalized and announced before the start of trading in the Asian market, but it was postponed and the news was published at 11:30 a.m. Tehran time.

Due to the uncertainty of expectations, attention has been focused on the Federal Reserve, which can cause a crisis in the banking sector by further increasing the interest rate in the current situation.

Arthur Hayes, the former CEO of digital currency exchange Bitmax, warned late last month that the United States probably has no way back and no way forward.

You will see that the Fed will solve this problem by shoring up a large part of US bank balance sheets by printing money (despite the opposition).

According to CMA Group’s “FedWatch” tool data, after the publication of the news of First Republic Bank, the expectation of a 0.25 percentage point increase in the interest rate by the Federal Reserve has reached 90%.

Meanwhile, the meeting of the Federal Open Market Committee itself can be influential in the possible change of the Bitcoin price trend.

Jackis, another popular trader before the closing of the monthly Bitcoin candle Forecast did:

Bitcoin seems to have become a stablecoin once again, this time at around $29,200. Obviously, this is due to the weekend, but I think the trend will remain relatively stable until Wednesday. On Wednesday we have the Federal Open Market Committee meeting, a highly anticipated event that could be a catalyst for Bitcoin prices.

Usually, the meetings of this committee cause volatility throughout the digital currency market, although it is usually accompanied by a fakeout; Because, the liquidity price of buy and sell requests returns to the previous levels before the prices return in the market.

Bitcoin price outperformed in April compared to February

Despite the current downward pressure on the price of Bitcoin, April avoided the title of worst month of 2023.

Data from the website CoinGlass shows that Bitcoin’s return this month was a total of 2.8%.

This figure was much better than the 0.03% gain in February, and at the same time, it managed to maintain a 4-month streak of gains in 2023.

However, looking at the weekly Bitcoin price candles that are trying to consolidate above the $30,000 resistance, the price outlook does not look very attractive in this time frame.

Of course, some analysts are still optimistic, including Mickybull Crypto, who wrote in part of his analysis on May 11:

This is what happened in the price action over the weekend. Note that one of the key issues in technical analysis is to be able to identify what has happened, what is happening, and what is likely to happen. The weekly and monthly Bitcoin candle closing trend is bullish.

Network transactions on the verge of reaching a new level

From another angle, such activities indicate a compelling trend of Bitcoin growth throughout 2023.

The number of daily Bitcoin transactions is nearing an all-time high after growing significantly this year, according to data from its cryptocurrency analytics platform.

Glassnode, in its analysis of the overall strength of Bitcoin’s upward trend, notes that the volume of transactions still does not match this trend. The company further said:

The number of Bitcoin transactions, address activity, Ordinals scripts, and Mempool density have all increased… However, the uptrend has only just begun and the volume of transactions necessary to support it has not yet increased.

The chart below shows the distribution of Unspent Realized Price Distributed in different market groups.

Checkmate, Glassnode’s senior analyst, is still optimistic about the continuation of Bitcoin’s upward trend and sees the lowest price level in late 2022 as the bottom of the current cycle. He concluded the last analysis self Wrote:

The best estimate is that the trend is justified and we have most likely bottomed out. But the flow of new capital is limited and is available to current investors. Therefore, expect a volatile trend; Conditions where traders have a large influence on liquidity and short time frames.

The fear and greed index is approaching its multi-year high

While the price of Bitcoin is fluctuating, sentiment among traders in the digital currency market has now recovered after a dip in late April.

The latest data of the fear and greed index shows that the “greed” of the market has returned to the level we last saw in November 2021 (Azer 1400); When the price of Bitcoin reached a historical low of $69,000.

This indicator is a retrospective indicator, but it shows that currently trader sentiment is affected by relatively small market changes.

This, in turn, underscores the importance of the current resistance levels of $30,000 for Bitcoin and $2,000 for Ethereum, which both assets are trying to break through.