The cryptocurrency market appears to be performing well today, with Bitcoin (BTC), Ether (ETH), and Binance Coin (BNB) all experiencing gains in the past 24 hours. BTC is up 7%, ETH has increased by 4.5%, and BNB has risen by 5.7%. This broad rally in crypto markets has seen Bitcoin return to challenging the week’s highs, which were its best performance since June 2022. However, the continued impact of the United States banking crisis has left many wondering if bulls can sustain this momentum.
As nervous traders look at the latest economic data, it’s clear that the Federal Reserve has been forced to inject liquidity into the financial system to contain a banking crisis that some claim is unlike any other. As more banks are warned to be at risk, and with contagion spreading to Europe, it appears that crypto is one of the few safe havens from the turmoil reminiscent of the Global Financial Crisis (GFC) of 2008.
This liquidity is seen as a driving factor behind the current crypto market upswing. The Federal Reserve’s injection of $300 billion into the economy has led to the growth of its balance sheet, which has risen for the first time since it began to raise interest rates. Banks have also been accessing the Fed’s discount window borrowing, resulting in a new record that has topped numbers from the 2008 GFC. This has raised questions about the end of quantitative tightening (QT) and the return of quantitative easing (QE), which was previously enacted by the Fed following the GFC and the COVID-19 cross-market crash in March 2020.
Hayes, the former BitMEX CEO, believes that the increase in liquidity could ultimately lead to significant crypto market growth. During the COVID money printing episode, Bitcoin rallied from $3k to $69k. Hayes asks, “What will it do this time?” As we are already seeing, Bitcoin is leading the way, with its price volatility still high, but bulls determined to move past the downtrend of the past eighteen months.
At the same time, other traders and analysts are watching Bitcoin’s weekly timeframes to determine future trends. Josh Rager has noted that the weekly chart could close above the 200-week exponential moving average (EMA) for the first time since June 2022. Rekt Capital, another trader and analyst, is hoping that Bitcoin will break out of a “macro downtrend” pattern that has been in place since the $69,000 all-time high. A breakout past the BTC Macro Downtrend would confirm a new Bull Market and confirm that November 2022 was the bottom.
While the latest economic data has caused nerves to fray across trading platforms, the increase in liquidity provided by the Federal Reserve has been a significant factor in the current crypto market upswing. Whether this trend will continue remains to be seen, but for now, Bitcoin and other cryptocurrencies appear to be one of the safer places for traders to invest their money.
