Bitcoin (BTC) begins a new week digesting important macroeconomic news as the United States suffers the second largest bank failure in its history.
After a sideways weekend, the BTC/USD pair was already volatile on the new weekly and monthly candle to the downside.
After stabilizing below $29,000, the BTC price is already facing further potential pressure, with First Republic Bank going into receivership and being taken over by JPMorgan Chase.
The move, announced during trading in Asia but before the Wall Street open, precedes an already busy week in which the Federal Reserve will reveal its next interest rate change.
With much to take in, the potential for continued surprises in the cryptocurrency markets is clearly evident.
Cointelegraph analyzes these risks and others in the weekly summary of the triggers for the price of cryptocurrencies, specifically Bitcoin.
BTC price volatility upsets a flat monthly close
Classic flash volatility accompanied Bitcoin as it moved to a new weekly and monthly candle after April ended sideways.
After closing the month at $29,300, the BTC/USD pair fell rapidly as liquidity was removed from the Binance order book.
This is the reason for local lows of 28,289 on Bitstamp overnight, according to monitoring resource Material Indicators, as tracked by data from Cointelegraph Markets Pro and TradingView.
#FireCharts 2.0 (beta) shows that when $29,150 was getting filled the bid ladder below was pulled and moved lower. #BTC Price action sliced through the freshly open hole of illiquidity like a hot knife through butter.
Seeing these moves play out in near realtime is a great way… pic.twitter.com/CnvRLRNcwc
— Material Indicators (@MI_Algos) May 1, 2023
Bitcoin thus hit “bounce” targets for some, including Michaël van de Poppe, founder and CEO of trading firm Eight, who signaled a possible return of strength to the altcoin markets.
“Bitcoin failed to hold $29,200 after multiple attempts. Hit $28,300 to play the bounce. Good chunk; altcoins are bouncing more firmly,” summarized in the day
The day before, Van de Poppe had warned that without a recovery to $30,000, Bitcoin would be unable to continue its uptrend and correctly predicted the eventual reversal level.
standard chop on #Bitcoin in the weekend.
No breakout above $30K = no trigger for continuation.
Holding above $29.2K, and still facing a potential correction to $28.3K as the ideal trigger for new longs. pic.twitter.com/3GJY8wImR9—Michaël van de Poppe (@CryptoMichNL) April 30, 2023
For his part, popular Crypto trader Tony confirmed that he was waiting for the $28,300 support to prove before taking a position.
Still not in a position yet, but looking here at the current support level we are on around $28,300. If we can maintain this level and hold, well this would be an entry for me on a long scalp
Will need to see a few 4 hour candles to demonstrate demand pic.twitter.com/zCKnl1vxw3
— Crypto Tony (@CryptoTony__) May 1, 2023
The same level was important to other traders as well, including Ninja, while Sun Tzu agreed that without a clear break out of the $30,000 zone, the chances of a prolonged slide remain.
“We remain within this important zone of resistance,” said to his Twitter followers on May 1.
“As always, never assume resistance is going to be broken until it is, as the risk-reward ratio for longs is quite low. The plan remains the same unless we break above $31,000.”
Still long bias for a bounce, added on the stop hunt.
If we start closing below $28.3k, I will cut and long somewhere sub $28k for a bounce
above $28.6k & bulls should be good for higher, if we keep stalling there… not good & likely cutting$BTC https://t.co/QFJzLzqveT pic.twitter.com/TYS7eGKxAF
— Ninja (@Ninjascalp) May 1, 2023
JPMorgan absorbs First Republic Bank in the second largest US bank failure.
In stark contrast to last week, macroeconomic events will take center stage in the coming days, with the US Federal Reserve meeting to decide on interest rate changes.
Despite being heavily priced in by markets, the next 0.25% hike, likely to be announced at the FOMC meeting on May 3, is not yet guaranteed.
The landscape remains complex. The Federal Reserve is raising rates despite mounting signs of an impending recession, while a more pressing danger is the ongoing March banking crisis.
As of May 1, First Republic Bank (FRB), whose shares plunged 75% in April alone, is under public receivership by the US Federal Deposit Insurance Corporation (FDIC). Banks bidding for FRB included PNC Financial Services Group, JPMorgan Chase and Citizens Financial Group, with JPMorgan eventually taking over.
Various news reports indicated that the deal should have been completed and announced before the start of operations in Asia, but this took longerbeing announced at approximately 8:00 am UTC.
First Republic seized by California regulator, JPMorgan to assume all deposits. First Republic is 2nd largest Bank Failure in US history. FDIC estimates a $13bn loss to deposit insurance fund. First Republic’s 84 offices to reopen on Mon as JPMorgan Chase. https://t.co/QBKxbAj76M pic.twitter.com/zqlPRFcGUg
—Holger Zschaepitz (@Schuldensuehner) May 1, 2023
As anticipation hangs in the air, attention turns to the Federal Reserve, which risks further unsettling the banking sector with a further rate hike under current circumstances.
Arthur Hayes, former CEO of cryptocurrency trading giant BitMEX, warned late last month that the United States could find itself between a rock and a hard place.
“Hope the Federal Reserve fixes this problem by backing more of the balance sheets of US banks. More money printing,” He said part of the activity on Twitter on April 29, with Hayes repeating an already familiar long-term BTC price target of $1 million.
Bets on the Federal Reserve carrying out the expected hike rose after the FRC news broke, with markets seeing a 90% probability of 0.25%, according to data from CME Group’s FedWatch tool.
For some Bitcoin traders, on the other hand, the FOMC event itself marks a potential price turning point.
“Looks like Bitcoin is going to be a stablecoin again, this time around $29,200. Obviously due to the weekend, but I think it’s going to stay relatively stable like this until Wednesday.” predicted the popular trader, Jackis, before the monthly close.
“On Wednesday we have the FOMC meeting, a highly anticipated event that is going to be the perfect boost.” {
FOMC days typically trigger volatility in cryptocurrency markets, albeit often brief and misleading, as liquidity is bought and sold before prices return to previous levels.
April continues to outperform February when it comes to Bitcoin price
Despite the current coolness about BTC’s price strength, April avoided receiving the title of the worst month of 2023.
Data from Coinglass shows that the total return of the BTC/USD pair was 2.8%.
These results surpassed those of February, which did not show any sizeable gains, while preserving Bitcoin’s “green” record for the year.
However, the picture looks less rosy on the weekly timeframes, with consolidating weekly candlesticks underscoring the stubbornness of the $30,000 resistance.
Some remained bullish, with popular Twitter account Mickybull Crypto dismissing weekend price action as a standard charting feature.
“This price action occurs on most weekends. Note: A key to correct TA is being able to identify what happened, what is happening, and what is likely to happen.” He said Part of a May 1 tweet.
“Meanwhile the close of BTC weekly and monthly candles is bullish.”
On-chain transactions challenge registries
Under the hood, the on-chain activity tells a compelling story of Bitcoin’s growth during its 2023 recovery.
According to data from on-chain analytics firm Glassnode, among others, Bitcoin’s daily transaction count is nearing all-time highs after an “explosive” rise this year.
In a thread From Twitter investigating the overall strength of the BTC price uptrend, Glassnode acknowledged that on-chain volume had yet to catch up.
“Bitcoin transaction counts, address activity, sign-ups, and Mempool congestion are all high. As is the degree of HODLing and the purchased supply below $30,000,” he says.
“Conviction remains. However, the uptrend is still young, and on-chain volumes have not picked up in support…yet.”
An accompanying graph showed the distributed unspent realized price of various market cohorts.
For its part, Checkmate; Glassnode principal analyst, was optimistic that Bitcoin continues its recovery and that the lows of late 2022 mark a local low.
“Best estimate –> Justified uptrend, and very likely low”, wrotesummarizing the latest research.
“But new capital inflows are limited and remain dominated by the existing holder base. So expect a choppy ride, with traders increasingly having influence on low terms and liquidity. Probably a little rally credibly hated by macroeconomic trends, which also takes many bulls with a hand of lettuce along the way.”
Crypto Market Greed Hovers Near Multi-Year Highs
Although the price has been wavering, cryptocurrency market sentiment has been rising after a dip in late April.
The latest readings from the Crypto Fear & Greed Index show that market “greed” is trending back to levels last seen at Bitcoin’s all-time high of $69,000 in November 2021.
Despite being a lagging indicator, the index shows how easily sentiment is currently swayed by comparatively small market swings.
This, in turn, reiterates the importance of current resistance levels for Bitcoin and Ether (ETH) in particular, with both assets facing key lines in the $30,000 and $2,000 sand, respectively.
This article does not contain investment advice or recommendations. All investing and trading involves risk, so readers should do their own research before making a decision.