Bitcoin Targets $100,000 Amid Looming U.S. Banking Crisis
Summary:
As the impending banking crisis in the U.S. bubbles, Bitcoin's trajectory is set towards the psychological $100,000 breakthrough. In Q1 of 2024, the financial distress of nearly 63 U.S. banks appeared imminent, marking the ninth straight quarter of unusually high unrealized losses. Amid this, BitMEX's co-founder Arthur Hayes recognized the banking crisis as the catalyst for Bitcoin's bull run in 2023. This has built solid support for the cryptocurrency and if the rising trend continues, Bitcoin price may soon see all-time highs, potentially reaching the $100,000 mark. Positive inflows in U.S. Bitcoin ETFs have been another factor lending upward momentum to Bitcoin's growth.
As per the recent narrative of Bitcoin (BTC) being the "digital gold", it is on the trajectory towards reaching a significant $100,000 milestone amid the brewing banking crisis in the United States. Nearly 63 American banks stood on the precipice of bankruptcy in the first trimester of 2024, an increase from 52 banks in the endangered zone during the third quarter of 2023, according to facts from the Federal Deposit Insurance Corporation’s (FDIC) quarterly report released on May 29.
Moreover, these financial institutions cumulatively possess $517 billion of unrecognized potential losses, an increase of $39 billion from the last quarter. This denotes the ninth successive month of unusually considerable unrealized losses, as indicated by the FDIC's report.
It cited higher unrecognized potential losses on residential mortgage-backed securities due to an increase in mortgage rates in Q1 as the reason for the overall rise in losses. This has been prevalent since Q1 2022 when the Federal Reserve decided to raise interest rates.
Concerns over the health of the American banking system have escalated since March 2023, following the unexpected failure of Silicon Valley Bank (SVB) and Silvergate Bank's self-imposed liquidation. Signature Bank also ceased its operations enforced by New York authorities on March 12, a mere two days post Silvergate Bank’s liquidation.
As a countermeasure to the crumbling banks, the Federal Reserve initiated the Bank Term Funding Program (BTFP), offering bank loans with a maturity of up to one year in exchange for the banks pledging "eligible assets" as security.
BitMEX's co-founder and former CEO Arthur Hayes pinpointed this emergency maneuver as the catalyst for Bitcoin's upward trend in 2023. He argued that investors started migrating to fixed-supply assets such as Bitcoin after recognizing this as an admission of causing the problem by the banking structure and its attempts to solve it by creating more money.
Bitcoin saw an increase of 26% from $21,900 to $28,054 in the week of March 13, 2023. Furthermore, since the onset of the global banking catastrophe in March 2023, BTC appreciated over 148% to currently reflect a rate of around $70,000.
Jamie Coutts, Chief Crypto Analyst at Realvision, was backed up by the FDIC's report, stating that Bitcoin is likely to establish robust support above $63,000, preceding further upward progression.
With higher lows consistently being registered since May's start, the Bitcoin price might reach unprecedented highs within the upcoming weeks based on the current chart trends. Should these patterns persist, the Bitcoin price could potentially escalate to the $100,000 landmark.
Inflows into the U.S. Bitcoin ETFs can also accelerate Bitcoin's ascent, with positive net inflows being recorded for 15 consecutive days as of June 4. Investment from these ETFs composed a significant share of the recent Bitcoin rally to record heights. Bitcoin ETFs amounted to roughly 75% of fresh investment in the leading cryptocurrency as it went beyond the $50,000 threshold on Feb. 15.
Bitcoin, however, faces a formidable obstacle at the $72,000 level. A surge beyond the $72,000 mark would offset over $922 million worth of collective leveraged short positions, as suggested by Coinglass data.
Please take note: The details presented in this article are not financial advice or recommendations. Every investment and trading move is associated with risk, and it is recommended that individuals conduct their own research prior to making decisions.
Published At
6/5/2024 5:25:37 PM
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