The behavior of the bitcoin price has been surprising for a week and the resurgence of banking risk in the United States and Europe. The bank failures in the United States and the difficulties of the bank Credit Suisse seem to have attracted capital to bitcoin. Let’s make the fundamental and technical point.
The fall in US and European banking stocks supports bitcoin
This is a question that comes up more and more in recent days: Is Bitcoin (BTC) a hedge against banking risk that has made a comeback in the United States and Europe?
The answer to this question is clearly no. However, the US bank failures and the enormous difficulties of Credit Suisse (which by the way are very old and which will be able to borrow 50 billion from the SNB, the Central Bank of Switzerland) generated favorable arbitrage for the crypto market, essentially in favor of the price of bitcoin.
These difficulties of commercial banks are the consequence of the vertical rise in key central bank interest rates for a year in order to fight against inflation, which has led to a fall in the price of bonds which are very present in the balance sheets of banks.
Bitcoin is not a bank failure hedge in the sense that it is simply not comparable:
- Bitcoin is not a depository institution;
- Bitcoin is not a credit institution;
- Bitcoin is not an investment establishment.
On the other hand, it is certain that Bitcoin cannot go bankrupt (unless mining is stopped, a black swan that is better not to think about) and that anyone who owns BTC can convert them at any time into fiduciary currency. In short, the funds are therefore secure, which must be compared to the so-called European bank guarantee of 100,000 euros per bank account.
Ultimately, the price of bitcoin has joined for a week the group of financial assets considered to have “a safe haven aspect”, in the same way as gold, silver-metal or even the Swiss franc on the foreign exchange market.
Within the cryptocurrency market itself, there has been a clear arbitrage of altcoins in favor of bitcoin as illustrated by the rise in the dominance of BTC. Finally, the uncertainty surrounding stablecoins may also have generated capital flows into BTC.
It is therefore indirectly that the bank failures have allowed a sharp rebound in the price of bitcoin, which is again facing the major technical resistance of 25,300 dollars.
Chart that juxtaposes the Banks/Finance sector indices of the US equity market and the European equity market
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Will the technical lock of 25300 dollars finally jump?
There reassembled bitcoin’s price since the Fed’s bailout announcement and USDC’s repeg is impressive. She combined vertical price action with very strong trading volume, but ultimately a back to square one happened.
The market is again in contact with the major technical resistance at $25,300a level that must be broken on the basis of an (at least) daily close to consider further upside.
If the resistance is crossed, the market will fill a bearish gap opened between $27,000 and $29,000. In case of another failure, the trading range 20,000 / 25,000 dollars will continue to unfold.
Chart that exposes the weekly (left) and daily (right) Japanese candles of the bitcoin futures contract on the Chicago Stock Exchange
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Vincent Ganne is a market strategist, technical analyst, trainer on the stock market and speaker on BFM Business. With a long experience in the field of analysis, he offers a global approach to financial markets. Both from a macroeconomic point of view and from a microeconomic point of view. Vincent Ganne also uses many aspects of chart analysis with the aim of forecasting trends in financial assets over the medium and long term.
Vincent Gane
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