Bitcoin price set to rally as macro backdrop perfect
As the banking crisis has spread from the US to Europe, Bitcoin may find the perfect macro environment for a larger price rally. In a tweet, notorious trader Andrew Kang wrote that the macro backdrop has never been more perfect.
Kang cited the Fed’s need to reduce its aggressiveness in raising interest rates in light of the economic slowdown and turmoil in the global financial system. In addition, shares are not attractive given falling sales and high price-to-earnings ratios.
On top of that, according to Kang, bonds offer a mediocre yield and R/R profile. The US dollar, the euro and other fiat currencies are likely to become increasingly devalued. “A fantastic setup to force flows from TradFi investors,” Kang asserts.
2 trillion dollars in liquidity and Credit Suisse
The trader’s tweet comes amid news that JP Morgan expects the Federal Reserve’s (Fed’s) emergency lending program to provide $2 trillion in liquidity. This will reverse the Fed’s monetary tightening policy, according to strategists at the big bank led by Nikolaos Panigirtzoglou.
A client note Wednesday obtained by Bloomberg said that while the biggest banks are unlikely to take up the program, the maximum draw on the facility is nearly $2 trillion, equal to the nominal value of bonds held by U.S. banks outside the top five.
In Europe, the Swiss National Bank and the Financial Markets Authority (FINMA) have published a statement on market uncertainty and declared that the troubled Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks. If necessary, the Swiss National Bank will provide Credit Suisse with liquidity.
Credit Suisse shares rose more than 40% at the start of the trading session after the bank announced it would borrow up to $54 billion from the Swiss National Bank.
Bitcoin Price About to Rally?
According to analyst “52kskew”, the recent pullback in financial markets, despite an upcoming Fed pivot, may have occurred due to uncertainty. “Something is not quite right with the markets today, […] Change in market tone is very evident when it comes to macro / traditional markets,” the analyst explainedadd:
Looks more like rush to get out and higher volatility increasing cash reserves more than market exposure for obvious reasons. The time horizon varies with this type of position change to actual market impact; However, it is always ahead of central bank pivots and global issues.
That a strong Bitcoin growth may be imminent is also indicated by the Binance spot order book. This shows an eye-popping abundance in the $22,500 to $24,000 range. Perhaps this could be Binance’s Liquidated Industry Fund being used to buy in this area?
Although the heat map does not mean that all orders are truly filled, the situation remains to be observed. However, the analyst also warned: “Moves [are] becomes more apparent here as buy orders are placed below price to push prices higher. Often this attracts perp buyers to fill spot sell orders above,” and shared the chart below.
As analyst Michaël van de Poppe explained, today is a big day for the market as the US unemployment figures will be released. Traders should keep an eye on it. “Last week we saw the biggest jump since October and wonder if we will see a continuation of that increase, which could mean we will have higher unemployment numbers,” van der Poppe said.
At press time, Bitcoin was trading at $24,937, again trying to break through the key $25,200 resistance.
Featured image from iStock, chart from TradingView.com