Bitcoin prices surged for a third day as the US banking system was bailed out, and the Federal Reserve is expected to halt rate hikes.
BTCUSD – Daily Chart
After testing the key $20,000 support level last week, the price of BTC has surged to touch $26,000.
Emergency measures implemented by US Regulators to backstop regional banks have avoided catastrophe at tech firms and crypto.
Economists at Goldman Sachs led investment banks expecting the central bank would back off its rate hikes due to the recent collapse of regional banks.
“In light of recent stress in the banking system, we no longer expect the FOMC to deliver a rate hike at its March 22 meeting with considerable uncertainty about the path beyond March,” Jan Hatzius and a team of Goldman Sachs economists said.
Nomura Bank went further, calling for the Fed to cut rates by 25bps at its next meeting and end its quantitative tightening.
February inflation in the US dropped to 0.4% from 0.5% in January, which analysts had expected, while the year-over-year figure dropped to 6% from 6.4%.
Traders see that as another green light for the Federal Reserve to back off its recent aggressive rate hike cycle.
Market Pivots Toward Speculative Investments
One week ago, traders had been betting the Fed would raise its benchmark rate by 50 basis points at its March meeting. However, following the collapse of Silicon Valley Bank on Friday and the shutdown of crypto-friendly Signature Bank over the weekend, traders quickly pivoted and only saw a slim chance of a rate hike in March and rate cuts by mid-summer.
Bitcoin traders can look to trade the long side of the coin and can hold these gains above the recent resistance at the $25,000 level.
US crypto firms are said to be looking to open bank accounts offshore following the collapse of crypto banks last week. Sygnum in Switzerland and Bank Frick in Lichtenstein told CoinDesk that they have seen a sharp increase in requests to open accounts in the past few days from various jurisdictions, including the US.
US lawmakers are now scrambling to investigate the failure of Silicon Valley Bank. However, the initial damage has been done with banking confidence. Some expect to see a rise in Bitcoin investment flows in the coming weeks and months. Bitcoin has rallied with a 24-hour volume of almost $50bn, the highest since late October 2022, as the FTX collapse was set to bring havoc to the sector.
