Bitcoin Breaks Through, Challenges 9-Month High
Lately, the drama surrounding major banks has been wilder than a bull on roller skates, yet among all this, Bitcoin and altcoins are making serious gains, challenging previous highs.
Silicon Valley Bank (SVB), which is (or was) basically royalty in the financial industry, was closed by the California Department of Financial Protection and Innovation on March 10. The New York Department of Financial Services shook the market by shutting down Signature Bank on March 12. However, the real kicker came from Silvergate choosing voluntary liquidation early in the month. The bank serviced many crypto-related businesses such as Coinbase, Celsius, and Paxos.
Bitcoin soared to $26,533 on March 14 but then dipped below $25,000 after Fed Chair Powell’s testimony. However, the apex cryptocurrency is changing hands at $26,505 at the time of writing, so we might see a break of the recent high any moment now.
The current uptick in Bitcoin values has been caused by various elements, but perhaps the most influential was the $25 billion financial boost of March 12th enforced by the U.S. Treasury and Federal Reserve. This move aimed to decrease banks’ systemic hazards, which may have been reassuring enough for investors to jump back in. The recent price increase of Bitcoin and the potential for bullish investors to score big suggest that the cryptocurrency market is still kicking.
However, there’s more turmoil in the banking sector: Credit Suisse Group is dealing with headwinds and is planning to borrow up to 50 billion CHF from the Swiss National Bank to reinforce its liquidity. It’s certainly something that’s worth keeping an eye on because further developments will likely send ripples across both legacy and crypto markets.
Technical Outlook – BTC/USD
The spike on March 14 took Bitcoin to levels last reached 9 months ago: $26,533. However, the price quickly dropped below $25,000 and it looked like we are dealing with a false break of resistance. Today, the pair returned very close to the levels reached on March 14, thus it’s clear that we are dealing with a true break of $25K.
So, what can we expect next? The most likely scenario is a break of the previous high and a continuation of the rally. But there are no guarantees, of course. The pair is approaching overbought, according to the Relative Strength Index, but this is not a sell signal – not by far. The RSI can shoot past its 70 level and the price can travel up in the meantime. Just look how much Bitcoin climbed with the RSI in overbought the last time. However, once the RSI starts to curve downwards, the probability of a retracement will increase.