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Bitcoin has done well as investors assess the impact of the recent bank collapses.
- Sell the BTC/USD pair and set a take-profit at 23,731.
- Add a stop-loss at 26,550.
- Timeline: 1 day.
- Set a buy-stop at 26,000 and a take-profit at 27,000.
- Add a stop-loss at 25,000.
Bitcoin is having a good week despite the rising fear in the financial market. The BTC/USD price surged to a multi-month high of 26,548, which was remarkably above last weekend’s low of 19,550. It has outperformed key financial assets like gold and stocks.
Bitcoin has done well as investors assess the impact of the recent bank collapses. This month, we have seen the collapse of key banks like Silicon Valley Bank, Silvergate, and Signature. All these banks had exposure to the tech and crypto industry.
These collapses have had a positive impact on cryptocurrencies. For one, American authorities announced that they were rescuing depositors of SVB and Signature Bank. In a statement on Tuesday, a senior official in Biden’s administration said that bank depositors were safe in case a bank fails.
This was notable since many players in the crypto industry had deposited at Signature and Silicon Valley Bank. The most important company was Circle, which had deposits in SVB. It had over $3.3 billion in the company, funds which were used to back USD Coin, the second-biggest stablecoin in the industry.
The other reason is that some investors believe that the collapse of these banks could push more people to safe assets. Gold and silver have also bounced back in the past few days.
The BTC/USD pair also jumped sharply because of the rising possibility that the Federal Reserve will not be as hawkish as expected. Instead, the bank will try to balance the need to fight rising inflation and the need to protect the financial sector.
Data published on Tuesday showed that the Fed has more work to do to fight inflation. The core consumer price index rose from 0.4% to 0.6% in February.
The BTC/USD exchange rate has been in a strong bullish trend in the past few weeks. It managed to move above the second resistance of the Woodie pivot points at 24,681. The pair also jumped above the key resistance level at 25,272, the previous year-to-date high. It also moved comfortably above the 25-period and 50-period moving averages.
Therefore, the rally will likely have a breather as buyers start taking a profit. If this happens, the next key point to watch will be the support at 24,690.
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