Arthur Hayes, former CEO of crypto exchange Bitmex, has predicted a remarkable surge in the price of bitcoin, envisioning it reaching million amidst anticipated banking bailout measures and significant money printing by the Federal Reserve. Hayes expects the troubled New York Community Bancorp (NYCB) to become bankrupt after Moody’s cut its credit rating to […]
Bitcoin News
Bitcoin To $30,000? Fed Unveils New Tool To Bailout Non-US Banks
As the US banking crisis is growing into a global banking crisis, the Bitcoin price is trading above ,000 again, showing an extremely strong trend that suggests further gains. One of the main reasons to remain bullish in this regard is that the money printer has been turned on once again by the US Federal Reserve (Fed).
As NewsBTC reported, the Fed added a whopping 0 billion to its portfolio last week, offsetting half of all quantitative tightening (QT) in the last 12 months. And the money printer will run even hotter starting today.
Fed Announces New Swap Lines
On Sunday, March 19, the Federal Reserve and six of the world’s largest central banks announced a “coordinated action” to facilitate dollar-denominated banking transactions to calm financial markets.
The Fed, the European Central Bank (ECB), and the central banks of Japan, the United Kingdom, Switzerland, and Canada will expand their swap operations, which central banks use to exchange foreign currency with each other, starting today, Monday, and continuing at least through the end of April. The move is intended to provide central banks outside the United States with a better liquidity of the US dollar.
The central banks reportedly agreed to increase the frequency of seven-day dollar currency swaps from weekly to daily. The swaps have been in place for several years – previously with weekly maturities.
How it works? The Fed lends dollars to foreign central banks. At the end of the term, the Fed swaps the currencies back at the original exchange rate and collects interest. It’s worth noting that the statement comes just hours after UBS announced its so-called “takeover” (aka bailout) of Credit Suisse.
Here’s Why It’s Bullish For Bitcoin
For BitMEX founder Arthur Hayes, the new swap lines are “another way to bailout non-US banks that isn’t obvious to the average person.” According to him, it is politically dangerous for the Fed to bail out foreign banks when so many small American banks need help.
The WSJ reported a few days ago that 186 banks face the same risks as Silicon Valley Bank. At the same time, the Fed can’t let foreign banks throw their government bonds into a liquid market and screw up even more.
The solution, according to Hayes, are swap lines. The Fed gives USD liquidity to major central banks like the ECB, while the ECB allows EU banks to give it US treasuries at par. This ensures that the ECB can give US dollars to the banks, which can then handle any outflows of USD deposits.
As a result, the US treasuries market is stabilized because no treasuries are actually sold. Any profit and loss is borne by the central bank, which can absorb infinite losses, which is reflected in the ECB’s balance sheet.
“Long Term: all treasuries held in the entire developed country banking system can now be lent against at par. Money Printer Go Brr,” Hayes concluded. Practically, the Fed becomes the global lender of last resort.
Following the recent news, the Bitcoin price is currently showing an extremely strong upward trend. As the 1-hour chart below shows, the hourly uptrend is still intact. At press time, Bitcoin traded at ,160.
On the Brink of a New Trend: Credit Suisse Receives 50 Billion Swiss Franc Bailout From Swiss National Bank
Credit Suisse has experienced a loss of confidence in the financial institution’s health following a significant drop in its shares’ value this week. Over the past five days, Credit Suisse shares have fallen 24.34% against the U.S. dollar, eroding trust amid fears about the global banking system. On Wednesday at around 9 p.m. (ET), Credit Suisse announced that it was strengthening its liquidity by borrowing 50 billion Swiss francs ( billion) from the Swiss National Bank (SNB). As concerns about the world’s banking system continue to spread, bailout measures are starting to emerge in the U.S. and abroad.
Emergency Measures to Stabilize Global Banking System Emerge as Credit Suisse and Other Banks Face Uncertainty
Credit Suisse’s stock hit a record low on Wednesday after the Saudi National Bank declined to assist the Zürich, Switzerland-based bank. The bank’s troubles have fueled fears of bank contagion after three major U.S. banks collapsed last week. Some market strategists predict that Credit Suisse will be the next to fail, and the actual value of Credit Suisse’s share price has been called into question. After a tumultuous day on Wednesday, Swiss officials announced that they were working to stabilize the financial institution. Both the Swiss National Bank and FINMA issued statements of support.
JUST IN: Swiss National Bank will bail out Credit Suisse if needed.
— Sasha Hodder (@sashahodler) March 15, 2023
Shortly after 9 p.m. Eastern Time, Credit Suisse issued a press release announcing that it had taken “decisive action to pre-emptively strengthen liquidity.” Credit Suisse stated that it intended to exercise the bank’s option to borrow up to CHF 50 billion from the Swiss National Bank (SNB) under a Covered Loan Facility, as well as a short-term liquidity facility, both of which would be fully collateralized by high-quality assets. The company also announced public tender offers for U.S. dollar-denominated senior debt securities and euro-denominated senior debt securities, with an expiration date of March 22, 2023, subject to terms and conditions.
“These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders,” the bank’s CEO Ulrich Koerner said in a statement. “We thank the SNB and FINMA as we execute our strategic transformation. My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs.”
Credit Suisse get a ,700,000,000 bailout.
This is more than the GDP of the majority of the world's countries and should keep them going for a few more days.— David Kurten (@davidkurten) March 16, 2023
The SNB bailout of Credit Suisse marks the second major bank bailout in less than a week, following the bailout of Silicon Valley Bank (SVB) and Signature Bank (SNBY) by the U.S. Federal Reserve, Treasury, and Federal Deposit Insurance Corporation (FDIC). However, U.S. politicians are emphasizing that these emergency measures are not comparable to the bank bailouts of 2008.
During the Great Recession, bank bailouts were widespread, starting with Bear Stearns’ injection of capital in March 2008 in the U.S. and then spreading abroad. In the U.K., the Royal Bank of Scotland and Lloyds TSB received government assistance in October 2008, while in Iceland, the government nationalized the country’s three largest banks that same month.
At that time, other countries, including Germany, France, and Switzerland, implemented various bailout measures during the 2008 financial crisis. The U.S. allowed the troubled investment bank Lehman Brothers to fail, but decided to bail out Fannie Mae, Freddie Mac, and AIG in 2008. Credit Suisse was one of the few banks that managed to survive the impact of the 2008 economic crisis without a bailout from the Swiss central bank.
While many banks sought bailouts during the Great Recession, Credit Suisse raised capital from the Qatar Investment Authority and other sources by selling convertible securities and initiating a public share offering. Although the current macroeconomic environment is not exactly the same as in 2008, some experts predict that this economic downturn could be worse. This time around, Credit Suisse’s hand was forced, and the bank had to borrow 50 billion Swiss francs or possibly face the same fate as SVB and SNBY.
What do you think will be the long-term impact of Credit Suisse’s bailout on the global banking system? Share your thoughts in the comments section below.
USDC Stablecoin Nears Parity With USD After Fed’s Bailout Announcement
The stablecoin USDC has nearly regained parity with the U.S. dollar after rising just above .99 on March 12, 2023, at 7:20 p.m. Eastern Time. The stablecoin jumped back to the .99 range after the U.S. Federal Reserve revealed it would bail out depositors of California’s Silicon Valley Bank (SVB) and New York’s Signature Bank. Following the Fed announcement, Circle CEO Jeremy Allaire said on Twitter that the company would rely on BNY Mellon to settle the process of minting and redemption.
Signature Bank Closure Forces Circle to Rely on BNY Mellon for USDC Minting and Redemption Settlements
At 8:45 p.m. Eastern Time on Sunday, March 12, 2023, the stablecoin usd coin (USDC) is trading at .998 per unit after jumping above the .99 range at around 7:20 p.m. Three minutes after the stablecoin returned to the .99 region, Circle CEO Jeremy Allaire tweeted that USDC operations would resume on Monday.
The announcement follows the U.S. Federal Reserve’s disclosure that it established a backstop entity called the Bank Term Funding Program (BTFP) to assist banks facing liquidity challenges. The central bank of the United States also stated that all depositors of Silicon Valley Bank (SVB) and Signature Bank would be fully compensated.
This means Circle Financial won’t lose funds because the bailout will make depositors whole, but Circle does lose a banking partner with Signature being shut down by New York regulators.
“We were heartened to see the U.S. government and financial regulators take crucial steps to mitigate risks extending from the fractional banking system,” Allaire said in a statement. “All deposits from SVB are 100% secure and will be available at banking open tomorrow.”
Allaire added:
100% of USDC reserves are also safe and secure, and we will complete our transfer for [the] remaining SVB cash to BNY Mellon. As previously shared, liquidity operations for USDC will resume [as] banking open[s] tomorrow morning.
The Circle CEO also commented on the Signature Bank issue, as Circle had previously used the company’s Signet service, which facilitated settlements between USDC and USD. Signature Bank’s Signet is a similar service to Silvergate Bank‘s now-defunct SEN network. “With the closure of Signature Bank announced tonight, we will not be able to process minting and redemption through Signet. We will be relying on settlements through BNY Mellon,” Allaire said in his Twitter statement.
In addition to USDC, several other top stablecoins, including DAI, USDD, USDP, GUSD, LUSD, and FRAX, also returned to the .99 range after depegging over the past weekend. As of March 12, the stablecoin economy is valued at 5.85 billion, following the market confidence bolstering stablecoin values. Moreover, stablecoins account for most of the global trade volume at the moment, with .78 billion out of the day’s .82 billion in crypto swaps.
What are your thoughts on USDC nearly regaining its parity with the U.S. dollar after the Fed announcement? Share your opinions in the comments section below.
NY Regulators Seize Control of Signature Bank, Depositors Assured by Federal Bailout
On Sunday, the New York Department of Financial Services, or DFS, announced that it had taken possession of Signature Bank. The DFS appointed the Federal Deposit Insurance Corporation, or FDIC, as the receiver of the bank. In a joint statement, the U.S. Federal Reserve, Treasury Department, and FDIC explained that all Signature depositors would be made whole, similar to a decision made by the federal government to bail out California’s Silicon Valley Bank (SVB).
Government Takes Decisive Action to Protect Depositors and Boost Public Confidence in U.S. Banking System
The crypto-friendly bank Signature Bank has been shut down by financial regulators, and the FDIC is now in control of the New York-based financial institution. In a press release published on Sunday evening, superintendent Adrienne Harris of the New York Department of Financial Services, or DFS, announced the decision. Harris detailed that Signature had approximately 0.36 billion in assets and total deposits of approximately .59 billion as of December 31, 2022.
The news follows the collapse of Silvergate Bank and the failure of Silicon Valley Bank, or SVB, which was the second-largest bank collapse in the U.S. since Washington Mutual’s, or Wamu’s, bankruptcy in 2008. While many market observers had to wait the entire weekend to hear about what would happen with SVB, the public doesn’t have to wait any longer, as the U.S. Federal Reserve, Treasury Department, and FDIC addressed the situation in a press statement.
The update, published at 6:15 p.m. ET, explains that the U.S. government is taking “decisive actions to protect the U.S. economy” and bolstering “public confidence in our banking system.” After consulting with secretary of the Treasury Janet Yellen, the FDIC and Federal Reserve approved a plan that fully protects all depositors. The government says that funds will be available for all depositors on March 13 and the resolution will “not be borne by the taxpayer.” In addition to applying this plan to SVB, the resolution of making all depositors whole will also be applied to Signature Bank.
@federalreserve announces Bank Term Funding Program (BTFP) to support American businesses and households, assure banks have ability to meet needs of all their depositors: https://t.co/JIMjkooIDV
— Federal Reserve (@federalreserve) March 12, 2023
At the same time the joint statement came out, another update explained that the Federal Reserve had created a Bank Term Funding Program, or BTFP, to help failed banks and their depositors. “With the approval of the Treasury Secretary, the Department of the Treasury will make available up to billion from the Exchange Stabilization Fund as a backstop for the BTFP. The Federal Reserve does not anticipate that it will be necessary to draw on these backstop funds,” the U.S. central bank declared.
The U.S. central bank added:
The Board is carefully monitoring developments in financial markets. The capital and liquidity positions of the U.S. banking system are strong and the U.S. financial system is resilient.
What impact do you think the government’s actions to protect depositors in the cases of Silicon Valley Bank and Signature Bank will have on the overall banking industry and public trust in financial institutions? Share your thoughts about this subject in the comments section below.
Report: Silicon Valley Bank Under FDIC Auction as Calls for Bailout Grow
The U.S. Federal Deposit Insurance Corporation (FDIC) began an auction process for Silicon Valley Bank (SVB) late Saturday night, according to reports. Final bids are due by Sunday afternoon. Unnamed sources indicate that the FDIC is seeking to close the deal promptly after California regulators closed the bank and placed it into FDIC receivership on Friday.
Sources Say FDIC Is Working Swiftly to Sell Off SVB Assets as Final Bids Due by Sunday Afternoon
The collapse of Silicon Valley Bank (SVB) has caused a significant stir in the United States, as many believe it has revealed a weakness in the U.S. banking system. However, U.S. Treasury secretary Janet Yellen has maintained that the system is “resilient” and “safe and well-capitalized.” According to a recent Bloomberg report, an auction for SVB began on Saturday evening, and final bids will be selected on Sunday.
Anonymous sources cited by Bloomberg say the FDIC is working swiftly to sell off SVB assets before branches open on Monday. The report states that final bids are due by Sunday afternoon, with a final decision potentially not being announced until Sunday evening. Bloomberg contributor Matthew Monks attempted to contact the FDIC for comment but was unable to reach anyone outside of their normal business hours.
The failure of SVB has sparked a significant debate over whether the bank will receive a bailout. However, based on Yellen’s statements, it appears that a bailout is not being considered. Many tech founders and venture capitalists, including Galaxy Digital’s Mike Novogratz, Y Combinator’s Garry Tan, and Craft Ventures’ David Sacks, are calling for a federal bailout.
Billionaire Bill Ackman, the CEO of Pershing Square Capital Management, has emphasized the need for a bailout, warning of “more bank runs” by Monday if action is not taken. In response to the situation, hundreds of venture capitalists and funds in the U.S. and the U.K. have issued a statement expressing their hope that the bank will be “appropriately capitalized.”
What do you think the future holds for Silicon Valley Bank and the wider U.S. banking industry in light of the ongoing debate over bailouts and the potential weaknesses in the system? Share your thoughts about this subject in the comments section below.
US Treasury Secretary Rules Out Government Bailout of Silicon Valley Bank
U.S. Treasury Secretary Janet Yellen has ruled out a government bailout of the collapsed Silicon Valley Bank (SVB), which was shut down by regulators on Friday. Yellen explained that the reforms put in place after the 2008 financial crisis were aimed at preventing the need for government bailouts.
Government Not Considering a Bailout for SVB, Says Yellen
U.S. Treasury Secretary Janet Yellen stated in an interview on CBS News, aired Sunday, that the government is not considering a bailout for the collapsed Silicon Valley Bank (SVB). The bank was shut down by regulators on Friday and put into receivership by the Federal Deposit Insurance Corporation (FDIC).
Yellen was asked whether the U.S. government needs to “intervene and take emergency measures because of SVB failure.” The treasury secretary replied: “America’s economy relies on a safe and sound banking system that can provide for the credit needs of our households and businesses. So whenever a bank, especially one like Silicon Valley Bank with billions of dollars in deposits fails, it’s clearly a concern.” She continued:
I’ve been working all weekend with our banking regulators to design appropriate policies to address this situation.
Yellen explained that in the aftermath of the 2008 financial crisis, “unique controls” were put in place to enhance capital and liquidity supervision, and they were tested during the early days of the Covid-19 pandemic. The system “proved its resilience so Americans can have confidence in the safety and soundness of our banking system,” she claimed.
Responding to a question about whether she has “ruled out” a government bailout of Silicon Valley Bank, the treasury secretary detailed:
Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out, and we’re certainly not looking. And the reforms that have been put in place means that we’re not going to do that again.
While noting that she cannot provide further details on the SVB situation at this time, Yellen insisted: “The American banking system is really safe and well-capitalized. It’s resilient.”
Yellen acknowledged that the government is “well aware that many startup firms have deposits and venture capital firms have deposits at this bank that have been affected by its failure,” emphasizing that “this is something we’re working to try to resolve.”
Following the collapse of Silicon Valley Bank, billionaire Bill Ackman, CEO and portfolio manager of Pershing Square Capital Management, warned of “vast and profound” consequences of the U.S. government allowing the bank to fail without protecting all depositors. He also warned of possible bank runs starting on Monday. Meanwhile, Rich Dad Poor Dad author Robert Kiyosaki has cautioned that another bank is set to crash.
What do you think about the statements by U.S. Treasury Secretary Janet Yellen? And, do you think the government should bail out SVB? Let us know in the comments section below.
Singapore’s State Investor Temasek Engaging With FTX For Bailout
There could be a surprising twist in the drama surrounding Sam Bankman-Fried’s insolvent crypto exchange FTX. As reported by The Straits Times, a possible government takeover by Singaporean state investor Temasek could be on the table. The group is one of FTX’s many investors.
FTX’s other investors include BlackRock, Sequoia Capital, Circle, Ontario Teachers’ Pension Plan, Paradigm, Tiger Global, SoftBank, , Ribbit Capital, Alan Howard, Multicoin Capital and VanEck.
Meanwhile, 3rd largest investor in @FTX_Official for @Temasek. HFSP! pic.twitter.com/sVjyOJZ99v
— Phryics.eth (@Phryics) November 9, 2022
Is Temasek Going To Bail Out FTX?
According to the report, Temasek, in its role as a shareholder of FTX contacted SBF after Binance announced its bailout plans. The report goes on to say that a takeover by CZ would mean such a power shift that “would make Binance reign supreme in the crypto world”.
For this reason, Temasek is in talks with FTX, according to a spokesperson:
We are aware of the developments between FTX and Binance, and are engaging FTX in our capacity as a shareholder
At the same time, Temasek’s spokesperson clarified that no details about the talks can be disclosed at the moment. “[G]iven the ongoing discussions between both companies, it wouldn’t be appropriate for us to comment beyond that”, The Straits Times reports.
Temasek invested in FTX’s Series B and Series C funding rounds, which raised 0 million and 0 million, respectively. However, FTX is not the only crypto exchange that Temasek has invested in the past. Temasek, through Vertex Ventures, also invested in Binance when the Singapore exchange launched operations.
Temasek is a Singapore government holding company with approximately 4.4 billion in net assets under management in 2021. The company is an investor that says it is guided by four key structural trends in building its long-term portfolio. These are: digitization, sustainable living, the future of consumption and longer life expectancy.
The anonymous trader “degentrading” reacted to the news on Twitter. He commented that in his opinion a bailout of Temasek is unlikely, as their current exposure to Temasek is “only” billion.
I doubt temasek would bail out FTX given their current commitment has only been 1bn? Especially if the hole is 6b. However if temasek does bail out FTX, I will send my sons to Singapore for army. Plz
— degentrading (@hodlKRYPTONITE) November 9, 2022
Aside from the fact that Temasek is an FTX investor, the nature of the discussions between Temasek and the crypto exchange are unclear at press time.
As Bitcoinist reported earlier today, there are big question marks behind the deal between Binance and FTX. The hole in FTX’s balance sheet could be much bigger than expected. Adam Cochran tweeted that some of his sources tend to believe that Binance could pull out of the deal at the last moment.
Coin Metrics Analyst: “FTX Might Have Provided Massive Bailout For Alameda In Q2”
Did this Coin Metrics analyst uncover the key to the whole Alameda/ FTX story? Because let’s face it, it doesn’t make sense. Both of Sam Bankman-Fried’s businesses were extremely profitable. FTX was the world’s third-biggest exchange and growing, why would anyone risk killing that golden goose? There must have been an underlying cause. Did this Coin Metrics analyst uncover it in the on-chain data? He might have.
The Head of R&D at Coin Metrics, Lucas Nuzzi, ends his thread with a warning: “Important to note that this is my own personal highly-speculative take on what happened based on these on-chain artifacts.” The case the Coin Metrics analyst is making rests on solid on-chain data, but the interpretation of what said data means is “highly-speculative.” So, take it with a grain of salt and don’t go around saying this is exactly what happened, because it might not be.
That being said, yikes!
The Coin Metrics Analyst Makes The Case
Lucas Nuzzi starts with a statement of fact, “I found evidence that FTX might have provided a massive bailout for Alameda in Q2 which now came back to haunt them.” And then, he poses a mystery. “40 days ago, 173 million FTT tokens worth over 4B USD became active on-chain.” Where did those tokens go? You guessed it, Alameda Research. The day was September 28th. A record-breaking .6B in FTT moved that day.
2/ That day, September 28, over 8.6 Billion USD worth of FTT was moved on-chain.
That was by far the largest daily move of FTT in the token's existence and one of the largest ERC20 daily moves we ever recorded at Coin Metrics. pic.twitter.com/GnUO1ZcCB7
— Lucas Nuzzi (@LucasNuzzi) November 8, 2022
“That was by far the largest daily move of FTT in the token’s existence and one of the largest ERC20 daily moves we ever recorded at Coin Metrics,” Nuzzi tweeted. What was happening around Alameda and FTX near that time? Nothing special, really.
- On August 24th, Sam Trabucco stepped down from the Co-CEO position at Alameda Research. “I will stay on as an advisor, but otherwise will not continue to have a strong day-to-day presence at the company,” Trabucco tweeted.
- On September 27th, Brett Harrison stepped down from the CEO position at FTX. “Over the next few months I’ll be transferring my responsibilities and moving into an advisory role at the company,” Harrison tweeted.
- This one is the kicker. On September 28th, Sam Bankman-Fried tweeted, “Heads up: rotating a few FTX wallets today (mostly non-circulating); we do this periodically. Might be a few more coming, won’t have any effect.”
If all of this is true, that last SBF tweet will probably make an appearance in court.
FTT price chart for 11/09/2022 on FTX | Source: FTT/USD on TradingView.com
So, What Did Alameda Do With The Money?
Believe it or not, the FTT tokens came directly from the original ICO smart contract. The Coin Metrics analyst “found a peculiar transaction that interacted with a contract from the FTT ICO. This 2019 contract *automatically* released 173 Million FTT from the token’s ICO.” Strange, but both organizations are joined at the hip. Then, things took a bizarre turn. “Alameda then sent that *entire* balance to the address of the deployer (creator) of the FTT ERC20, which is controlled by someone at FTX.”
4/ The recipient of the .19 B USD worth of FTT tokens was no one but Alameda Research!
So what? Alameda and FTX were intrinsically connected from day 1 and Alameda obviously participated in the FTX ICO.
But what happened next was interesting…
— Lucas Nuzzi (@LucasNuzzi) November 8, 2022
WHAT?
The Coin Metrics Analyst’s Theory
According to Lucas Nuzzi, Alameda Research wasn’t immune to the crypto contagion that plagued the space in Q2. In fact, the company might’ve blown up with 3AC, Voyager, and Celsius. “It ONLY survived because it was able to secure funding from FTX using as “collateral” the 172M FTT that was guaranteed to vest 4 months later.” That’s an extremely risky move. It almost seems like FTX didn’t have a choice.
8/ The Alameda bailout likely put a dent on FTXs balance sheet to the point where it was no longer solvent.
This would have been fine if the price of FTT didn't collapse and a bank run ensued
This is why Alameda tried their best to protect FTT's price.https://t.co/nX1tphjLNR
— Lucas Nuzzi (@LucasNuzzi) November 8, 2022
They didn’t, because “the FTT ICO contract vests automatically. Had FTX let Alameda implode in May, their collapse would have ensured the subsequent liquidation of all FTT tokens vested in September.” If the scenario the Coin Metrics analyst poses is real, SBF and company had to do it. And they paid a heavy price for it. “The Alameda bailout likely put a dent on FTXs balance sheet to the point where it was no longer solvent. This would have been fine if the price of FTT didn’t collapse and a bank run ensued.”
This Is Where CZ And Binance Come In
In this scenario, CZ And Binance somehow found out about the deal. And the biggest cryptocurrency exchange by trading volume had a heavy FTT bag. “As part of Binance’s exit from FTX equity last year, Binance received roughly .1 billion USD equivalent in cash (BUSD and FTT),” CZ tweeted when he announced they were liquidating. What does this heavy FTT bag mean? The Coin Metrics analyst explains, “As large holders of FTT, they could start deliberately tanking that market to force FTX to face a liquidity crunch.”
And they did.
And then they offered to buy FTX and relieve them of their problems.
Presumably for pennies on the dollar.
A master stroke, if true.
But remember the Coin Metrics’ analyst warning, “Important to note that this is my own personal highly-speculative take on what happened based on these on-chain artifacts.”
Featured Image by Gerd Altmann from Pixabay | Charts by TradingView
NewsBTC
Bitcoin Portrays Bullish Setup as Trump Plans Yet Another Bailout
Bitcoin undergoes an intraday bounce after testing its long-term support.
The recovery follows a deeper downside move earlier this week in the wake of the US oil market’s historic crash.
President Donald Trump insists on saving the crude industry via another bailout.
Bitcoin rebounded higher Wednesday as the Donald Trump administration discussed the prospects of introducing yet another stimulus package.
The benchmark cryptocurrency advanced 4, or 3.75 percent, to establish a daily high near ,985 on BitMEX. The intraday recovery also took place near a long-term support area near ,400, suggesting that traders want to maintain their interim bullish bias ahead of bitcoin’s supply rate cut this May.
XBTUSD holds long-term price floor near ,400 | Source: TradingView.com, BitMEX
Hyperinflation Excites Bitcoin Bulls
Part of the reason could be fears of hyperinflation. The price of benchmark West Texas Intermediate slipped below zero on Monday, reacting to the nosediving energy demand prompted by the Coronavirus-induced lockdowns and travel restrictions across the world.
Trump made a heroic effort on Tuesday to help the oil sector coming back to its feet. He asked his cabinet to inject cash into the industry to stop it from pursuing a historic collapse.
“We will never let the great U.S. Oil & Gas Industry down. I have instructed the Secretary of Energy and Secretary of the Treasury to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future!” Trump said on Twitter.
The announcement came atop the US Congress’ trillion stimulus package to safeguard the economy, announced back in March. Bitcoin bulls perceived it as a sign of inflation, noting that it may leave a massive dent on people’s savings.
“The money printer goes BRRR, now bailing out oil and gas companies.” tweeted Gabor Gurbacs, the digital asset strategist/director at New York-based VanEck, alongside a bitcoin hashtag. “Why should the average person pay taxes if we can just print money for [selected] companies?”
Pain Before Gain
Even as the fundamentals improved for bitcoin, the cryptocurrency’s growing short-term correlation with equities continued to strangle its bullish bias.
Investment strategists at Glenmede wrote in a client note that US stocks could plunge back towards its yearly lows as corporate earnings dwindle and consumerism comes to a long halt amidst the Coronavirus scare. That is mainly a scary outlook for Bitcoin, which has tailed deeper dives and mild recoveries of the US equities since mid-March.
The stock markets are also important for bitcoin now.
The strong correlation has not been denied for some time.
If the SP500 continues to slide, bitcoin will probably follow.
there is a small chance that bitcoin will decouple at some point, but so far I still don't see it.
— silver bullet (@SilverBulletBTC) April 22, 2020
Even a technical perspective showcases a similar outcome for the cryptocurrency. It is trending inside a Rising Wedge, a bearing reversal indicator, that could topple its price to as low as ,300, as covered earlier by NewsBTC.
Nevertheless, a renewed accumulation behavior at lower levels could see prices surge to as high as ,000.
Photo by Darren Halstead on Unsplash
NewsBTC