The crypto market is up today as the impact of the ongoing United States banking crisis plays out. With the Federal Reserve injecting $300 billion into the economy, data from Cointelegraph Markets Pro and TradingView shows Bitcoin (BTC) up 7%, Ether (ETH) 4.5% and Binance Coin (BNB) 5.7% in 24 hours.
The banking crisis has caused a broad rally in crypto markets, with Bitcoin back challenging the week’s highs and its best performance since June 2022. This has caused many to turn to crypto as a safe haven from the kind of turmoil reminiscent of the Global Financial Crisis (GFC) of 2008.
So what are the major reasons why the crypto market is up today? Popular markets commentator Holger Zschaepitz summarizes it best: “It’s the liquidity, stupid!” The implosion of Silicon Valley Bank (SVB) and Signature Bank has resulted in the Fed providing an emergency $297 billion, growing its balance sheet for the first time since it began to raise interest rates. This has seen banks take $150 billion, a new record even topping the 2008 GFC.
The latest economic data has caused reactions heralding the end of quantitative tightening (QT) — the process of removing liquidity from the economy — and a return to its opposite, quantitative easing (QE). This policy was enacted previously by the Fed after the GFC, as well as in March 2020 during the COVID-19 cross-market crash.
Crypto market performance is sensitive to central bank liquidity trends, not just in the U.S. The more liquidity pumped into the global economy by central banks, the better, former BitMEX CEO Arthur Hayes claimed in February. This has been seen with the People’s Bank of China (PBoC) and Bank of Japan (BoJ) copying the trend this month.
Bitcoin price volatility may still be rampant, but the message from crypto is increasingly clear — bulls are determined to ditch the past eighteen months’ downtrend. BTC/USD is trading at over $26,000 at the time of writing, eyeing up a retest of its nine-month highs from earlier in the week. The combined cryptocurrency market cap is attempting to do the same, up over 3% on the day to $1.098 trillion.
Traders and analysts are hoping that Bitcoin might break out of a “macro downtrend” pattern in place since the $69,000 all-time high. A breakout past the BTC Macro Downtrend would confirm a new Bull Market and in turn confirm that November 2022 was the bottom, according to Rekt Capital.
The crypto market is up today as the impact of the ongoing United States banking crisis plays out. With the Federal Reserve injecting $300 billion into the economy, crypto is one of the few safe havens from the kind of turmoil reminiscent of the Global Financial Crisis (GFC) of 2008. The more liquidity pumped into the global economy by central banks, the better, and traders and analysts are hoping that Bitcoin might break out of a “macro downtrend” pattern in place since the $69,000 all-time high. The message from crypto is increasingly clear — bulls are determined to ditch the past eighteen months’ downtrend.