Bitcoin (BTC) could be heating up for another rally, here’s why
While Bitcoins (BTC) Price performance since the start of the year has been impressive, rising over 80% since January due to several factors, the asset has plunged in recent weeks for other reasons which include the ongoing regulatory scrutiny of the industry.
However, according to recent reports, the asset may be just that ready for another rally. In the last 24 hours, it was reported that another major US bank is facing a financial run that signals insolvency or bankruptcy.
Another Major Bank Collapse Could Affect Bitcoin Rally
According to the latest update, First Republic Bank (FRC) is currently experiencing a financial run as the bank revealed it lost nearly $100 billion in deposits amid last month’s banking crisis. The bank said it is currently offloading between $50 billion and $100 billion in debt instruments as part of its “strategic options” to address the massive capital outflow.
However, the White House has expressed concern about a way to help the bank out of insolvency, as reported by the Financial Times, which revealed that officials from the Biden administration, the Federal Reserve and the Treasury Department have consulted with the bank’s top executives in recent days.
Despite this, it seems that investors and traditional bankers have started to panic and are looking for a safer haven or an alternative for the store of value. Following the news, First Republic shares plunged more than 40% to hit a record low in Tuesday’s trading.
FRC shares in particular hit a record low of $8.10 when markets closed on Tuesday. Interestingly, while that was happening, Bitcoin prices began to experience a bullish movement. This bullish movement can be attributed to the panic of traditional bankers who see BTC as a bold alternative as major banks continue to collapse.
BTC may heat up for another rally
The last time a similar banking crisis took place in the United States was in March of this year, Bitcoin reacted positively to the news and drained $30,000 for the first time in nine months. And according to Bitcoin’s recent price action, the asset appears to be confirming expected price action based on previous price action exposure to the banking crisis news.
Over the past 24 hours, Bitcoin has recorded gains, rising 7.5% with a market price of $29,817. Over $30 billion has been added to its market cap in the same period. Trading volume has also increased, indicating a buying pressure.
According to on-chain data provider Santiment, Bitcoin’s social dominance has increased compared to other altcoins in the market. Sentiment noted this “occurs during market euphoria or (in this case) fear.” The data provider further noted: “Prices can go back quickly.”
Santiment isn’t the only one who predicted Bitcoin’s rebound from its previous bearish price action. Popular cryptanalyst Michael Van de Poppe stated:
Bitcoin is not looking bad on the higher time frames. Healthy correction, and as long as Bitcoin maintains above $25,300, it is likely that we will continue this rally towards $42,000.
According to the analyst, as long as Bitcoin remains above $25,300, as it currently is as an asset traded over $29,000will Bitcoin enjoy another rally to trade above $40,000.
Featured image from iStock, chart from TradingView
