In this week’s Market Report, Marcel Pechman weighs the possibilities of Bitcoin’s (BTC) $28,000 support holding strong amid its recent failure to break the $30,000 resistance. Market indicators, such as margin and futures, play a significant role in determining whether the whales and market makers have indeed turned bearish on BTC. Pechman highlights the importance of the $340-million liquidation in leveraged futures, which has the potential to influence the crypto market during abrupt price movements.
Examining data from the OKX exchange, Pechman delves into how leverage pushed Bitcoin’s price close to $30,000 on April 27, and its subsequent fall to $28,000. Interestingly, top traders’ long-to-short data provided by exchanges suggests that whales on OKX and Binance were adding leveraged longs between April 25 and May 1, rather than leveraged short positions. This signals that bears may not be as confident as previously thought, and thus, it might be premature for bulls to throw in the towel. Although Pechman acknowledges the possibility of Bitcoin dipping to $26,000, the lack of sellers willing to bet on such a move offers a silver lining.
On another front, Pechman discusses the recent failure of First Republic Bank (FRB) and its bailout by JPMorgan. He believes that the United States Federal Deposit Insurance Corporation obtaining emergency funding from the U.S. Treasury to cover the losses indicates a distressing situation for banks across the country. Bitcoin’s negative response to this event might be due to investors already pricing in the news, or interpreting the occurence as a signal that the government will consistently bail out failing banks.
This presumption raises questions about the value of the U.S. dollar, which has weakened against other major currencies and might continue to do so if the banking crisis escalates. Although no depositors are immediately affected, the currency’s ongoing devaluation could positively impact Bitcoin in the mid to long-term.
In the final segment, Pechman explains the VIX S&P 500 volatility indicator and its relevance to the current market situation. The recent 16% level, which is the lowest in 18 months, might signify a cycle top or bottom in the near future. Considering that the last time the indicator reached 15% was just a month before the S&P 500’s all-time high in December 2021, investors should keep a keen eye on its fluctuations.
In conclusion, amidst Bitcoin’s recent struggles and the ongoing tumult in the traditional banking system, the future of the digital asset remains uncertain. However, various indicators suggest opportunities for both bulls and bears, as well as potential long-term benefits for the cryptocurrency in the event of a weakened U.S. dollar.