Bitcoin BTC Rate Crashes Below 24.5K As European Banking Woes Spook Investors
Bitcoin tumbled below $24,500 as investors weighed a potential European banking meltdown sparked by concerns about oft-embattled Credit Suisse.
The largest cryptocurrency by market cap fell to $23,946 at one point before regaining ground to recently trade at $24,502, roughly flat over the course of 24 hours. But it was still well off BTC’s highs from the previous day when it surged past $26,000 following the release of mildly upbeat Consumer Price Index (CPI) inflation data for February. The 6% CPI improved from last month’s reading and offered investors looking for more monetary policy dovish hope that the US Federal Reserve will at least temporarily halt its recent diet of rate hikes.
On Wednesday, banking problems trumped monetary policy considerations.
The Swiss National Bank appeared to at least temporarily stop the damage after announcing it would provide CS with liquidity “if necessary,” dismissing the notion that contagion linked to the failure of two major US regional banks last week had spread abroad.
Credit Suisse shares fell 13%, as did several European bank stocks, including French banks BNP Paribas ( BNP.PA ) and Société Générale ( GLE:FP ), down 8% and 10% respectively. European markets fell as investors in riskier assets soured.
US stock markets initially fell on the banking news coming out of Europe, before recovering some of their losses. The S&P 500 and Dow Jones Industrial Average (DJIA) fell 0.7% and 0.8%, respectively. But the technology-heavy Nasdaq Composite rose 0.05 percent.
Regional bank stocks also plunged, with First Republic Bank ( FRC ) and PacWest Bancorp ( PACW ) falling 21% and 13%, respectively.
“Credit Suisse is a bigger story than Silicon Valley Bank (SVB), and this has Wall Street extremely nervous,” Edward Moya, senior market analyst at foreign exchange market maker Oanda, wrote in an email Wednesday. “Bitcoin’s decline isn’t so bad when you consider how much pressure is hitting stocks, oil prices and the euro.”
While the banking crisis could eventually be a bullish moment for bitcoin, “for now, crypto weakness is justified,” Moya added.
Meanwhile, the CME FedWatch Tool showed that about 55% of traders believe the Fed will not raise interest rates at its next Federal Open Market Committee (FOMC) meeting starting on March 22. Another 45% expect the Fed to raise rates by 25 basis points (bps), a sharp change from a week ago when a growing number of observers thought the Fed would raise rates by 50 bps.
Will Tamplin, a senior analyst at technical analysis firm Fairlead Strategies, said BTC’s resistance is strong near $25,200 as it tackles “medium-term overbought conditions that have become a headwind.”
“This increases short-term downside risk to 200-day support [moving average] (~$19,800),” Tamplin told CoinDesk in an email.
The CoinDesk Market Index, which measures the overall performance of the crypto market, fell about 3% for the day.
