Bitcoin’s breakout performance in 2023 was partly the result of turmoil in the traditional financial markets following a wave of crises that hit Silicon Valley Bank, Signature Bank and, most critically, Credit Suisse.
A run on deposits saw investors turn to what they considered safe-haven assets to hedge against further TradFi turmoil, with gold and bitcoin as short-term saviors.
Bitcoin rose as high as US$31,000 – an 80% increase so far this year – in mid-April, only for a fairly sharp correction back to around 27k earlier this week.
Yet the specter of TradFi volatility reared its ugly head again in the form of First Republic Bank (NYSE:FRC) (one of the US’s top regions and among the most vulnerable to SVB’s collapse) its latest earnings results.
First Republic’s shares fell like a rock on Tuesday after revealing unprecedented deposit outflows of 40% to $104.5 billion in the quarter, well worse than consensus estimates.
Conversely, bitcoin rose close to 3% after First Bank’s revelations, in what looks like an inverse relationship to the perceived health of the US financial sector’s middle tier. At the time of writing, the BTC/USDT pair changed hands at USD 28,700.
Bitcoin back over 30k? – Source: currency.com
Although open interest in the derivatives market has not increased noticeably, the tick higher in bitcoin’s spot price suggested a rush of inflows as investors seek to diversify.
Ethereum (ETH) joined yesterday’s rally by adding 1.3% to $1,870, with an incremental reversal to $1,860 in the morning Asia trading session.
ETH’s post-Shanghai price rally has largely been capped, but the world’s second-largest cryptocurrency appears to be consolidating around the 1.8,000 mark, with significant buying support evident in the Binance order book.
On a weekly basis, ether has underperformed against bitcoin, losing 8% versus bitcoin’s 3.5%.
Global cryptocurrency market capitalization ticked up 2.7% to $1.18 billion at the close of trading in Asia.
Binance drops Voyager Digital (CSE:VYGR, OTCQX:VYGVF)
In other news, Binance.US has dropped plans to buy bankrupt crypto lender Voyager Digital’s assets for $1 billion, less than a week after the courts gave it the go-ahead.
Reason? Binance.US said: “The hostile and uncertain regulatory climate in the US has introduced an unpredictable operating environment that affects the entire US business community.”
Voyager called it a “disappointing” development, but said it “will now move quickly to return value to customers via direct distribution”.
This marks the second failed deal for Voyager, which was one of the most high-profile collapses leading up to the 2022 crypto winter.
FTX initially agreed to buy out the group, but that deal fell through for reasons I don’t need to explain.
