By
Temitope Olatunji
April 24th, 2024
Amid the unfolding banking crisis and interest rate hikes, Bitcoin has been showing strong resilience attempting another breakout above $30,000.
On Wednesday, May 3, the US Federal Reserve announced another 25 basis points rate hike taking the US funds rate to more than 5% for the first time since 2007. In hours after the Fed announced the rate hike, Bitcoin (BTC) made a quick surge of more than 2% taking the price above $29,000.
This Bitcoin price surge amid the recovery in the broader cryptocurrency market. In the accompanying statement after the FOMC meeting, Fed Chairman Jerome Powell hinted that the US central bank could be pausing any further rate hikes from here onwards.
However, considering the strong labor market and stick inflation, the interest rates are likely to stay elevated for quite some time before resuming the downward trajectory.
On the other hand, Bitcoin continues to show strong resilience against the ongoing banking crisis. After the fall of the First Republic Bank last week, another mid-sized US bank PacWest Bancorp. is on the brink of a collapse. On Wednesday, the shares of PacWest Bancorp. tanked by a staggering 50% during the trading session.
Last month in April, banking giant JPMorgan said that the current banking crisis is a “vindication of the crypto system”. The company stated that “the US banking crisis and the intense shift in US bank deposits to US money market funds are viewed by crypto supporters as a vindication of the crypto ecosystem,” with analysts arguing that the crisis “exposed the weaknesses of the traditional financial system given bank’s maturity mismatch is susceptible to bank runs”.
What’s Next for Bitcoin (BTC)?
With the current move, it’s clear that Bitcoin bulls will be making yet another attempt to push the BTC price above $30,000. However, Bitcoin has been facing strong rejections at this price point every time it plans to cross this.
Thus, any breakthrough above the $30,000 level would be a definitive sign of growing investors’ confidence in the asset instead of seeing it as a risky asset. Many analysts are already predicting a strong rally to $100,000.
On the other hand, the Bitcoin futures contracts are typically trading at a slight premium to the spot market indicating that sellers have been asking for more money to delay settlements.
Along with Bitcoin other altcoins have registered a strong recovery. The Ether (ETH) price also shot up by 2% shooting past $1,900 levels. Other altcoins like Cardano (ADA), Solana (SOL), Polygon (MATIC), etc. have gained between 1.5-2%.