Banking crisis continues to ferment

With the intervention of the Federal Reserve, leading banks such as JPMorgan Chase injected capital into First Republic Bank, and the Swiss National Bank also took the lead in allowing UBS to acquire Credit Suisse. The "bottom-line" actions of the government and the central bank did not completely soothe market concerns.

 

Investors are still paying attention to the development of the situation. They believe that the banking industry is still facing a crisis and there is a strong wait-and-see sentiment. At the same time, the large-scale default of banks, which are economic stabilizers, will also suppress the subsequent economic recovery. The risk of recession in the United States and even the world is increasing, which also discourages investors.

 

Under the shadow of pessimism, the market's risk aversion sentiment rose sharply, and gold ushered in a long-awaited surge, and the increase and speed were astonishing. Surprisingly, the price of Bitcoin also increased significantly.

Bitcoin acts as a safe haven asset

In the past two years, the trend of Bitcoin and other tokens has fallen into a bear market due to the suppression of the Federal Reserve's interest rate hikes and the rise of the US dollar. In November 2020, as the US CPI data dropped sharply, which shook the Fed's interest rate hike expectations and the US dollar, Bitcoin surged significantly. .

 

The recent collapse of banks in the United States and Europe has caused investors to re-examine the traditional banking industry. As cryptocurrencies are less dependent on traditional banks, investors have once again discussed the benefits of "decentralization". At the same time, with the weakening of the marginal impact of the US dollar, the bottom of cryptocurrencies has begun to emerge. Bitcoin has acquired safe-haven properties at certain moments, and bottom-fishing funds are eager to try.

 

The instability of the banking industry is extremely harmful to the economy. The market also expects that the Federal Reserve is likely to end its interest rate hike cycle and may even go directly into a rate cut cycle. The outlook for the US dollar is weak, and Bitcoin buying has returned in large numbers under the stimulus of a possible restart of the industry.

Bitcoin's rise: The key lies in the 30,000 mark

Bitcoin is currently trading below the 30,000 mark and is still in a bear market.

The recent strong rebound has pushed the price to continuously break through the resistance, which is a good thing for the bulls, but the trend still needs to move upward. Once the 30,000 mark is recovered and stabilized, it is expected to establish the bottom of the trend, which will be extremely beneficial to the future market's upward trend, and the target will move up to 40,000 US dollars; if it is constrained by the 30,000 mark, it will not be able to establish an upward trend, and continue to maintain a low level. Once the wind direction reverses, the price may still return to 20,000 and then fall. The ownership of the 30,000 mark helps to judge the trend. The short-term support is at 25,000 and 22,000, and the resistance is at 28,000-30,000.

 

This week’s FOMC statement is extremely important, as it concerns the US dollar, Bitcoin, and the direction of all commodities.