Bitcoin investors and traders are paying close attention to US inflation data as they await its impact on the cryptocurrency’s price. Since last Friday, Bitcoin has been on a remarkable surge, rebounding nearly 30% from its recent lows and setting a new 2023 record above $26,000. The cryptocurrency surge comes amid a banking sector crisis and widespread bank runs. The upward trend in both BTC and Ethereum’s value has contributed to an overall increase in the value of most cryptocurrencies. In addition, US authorities’ readiness to support banks that accept cryptocurrency has instilled investor confidence and reinstated trust in the financial sector, leading to a surge in cryptocurrency demand.
The recent surge in BTC’s value was ignited by the US regulators’ backing for Silicon Valley Bank and Signature Bank, which many investors and traders viewed as a positive signal for the overall banking sector. As a result, market sentiment improved, and investors rushed to BTC, causing its value to skyrocket. Despite the recent closures of banks that were friendly towards cryptocurrencies, the cryptocurrency market climbed above $1.08 trillion for the first time in weeks. Ethereum (ETH) also witnessed a boost, rising above $1,600.
This move highlights the increasing mainstream adoption of cryptocurrencies, suggesting that the cryptocurrency market may experience rapid growth and volatility as more investors and institutions embrace digital assets. It is expected that investors’ confidence in the cryptocurrency sector will increase, with governments and regulatory organizations increasingly willing to support the industry. The European Union has proposed a specialized blockchain containing the region’s relevant personal identity and data information, which safeguards user privacy while complying with MiCA, the EU’s upcoming cryptocurrency regulatory framework.
The US dollar faced difficulties in gaining momentum on Tuesday and hit a multi-week low due to concerns about a potential systemic crisis following the collapse of a US technology-focused lender. The current crisis in the banking sector has sparked speculation that the Federal Reserve may halt its aggressive rate-hiking cycle. As a result, market expectations suggest that there is a 31% chance of rate cuts expected for the remainder of the year.
The Federal Reserve’s rate hikes have played a significant role in driving the US dollar’s strength, but the expectations of how high rates could climb have moderated. The important US inflation report is set to be released later on Tuesday, adding to the Fed’s dilemma on whether to continue with its path of rate hikes to counter persistent price pressures or to hold off on further tightening of monetary policy to allow the banking system some relief.
On Tuesday, the BTC/USD pair traded with a bullish bias at the $25,750 level. On the upside, Bitcoin faces immediate resistance at the $26,700 level. Further on the higher side, a breakout of the $26,700 level can open up further room for buying until $27,400. On the lower side, Bitcoin’s immediate support level is at $25,125, and a break below this level could open up further room for selling until the $23,750 level. It may be worth considering a buying trade if the price surpasses the $25,225 level today.
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In conclusion, the cryptocurrency market is witnessing significant growth, largely driven by Bitcoin and Ethereum, despite ongoing banking sector crises and widespread bank runs. Investors are eagerly watching US inflation data for its impact on cryptocurrency prices. The recent surge in BTC’s value is due to the US regulators’ backing for Silicon Valley Bank and Signature Bank, indicating increasing mainstream adoption of cryptocurrencies. The European Union has proposed a specialized blockchain with personal identity and data information that safeguards user privacy while complying with MiCA. The US dollar’s multi-week low and the Federal Reserve’s upcoming inflation report further add to the dilemma of continuing with rate hikes or holding off to allow relief to the banking system. On Tuesday, the BTC/USD pair traded with a bullish bias at the $25,750 level, with Bitcoin facing immediate resistance at the $26,700 level. Overall, the future of cryptocurrencies seems optimistic as more investors and institutions embrace digital assets.
