The title of this article might trigger some of the crypto haters but let’s discuss the recent price action in cryptocurrencies.
I was initially bearish on Bitcoin and other crypto’s as certain support levels were taken out. In a recent chart attack video, I highlighted these breakdowns and what would nullify the bearish outlook. It all depended on the retest of major resistance levels. Bitcoin and other cryptos have actually taken those levels out… and some more.
Bitcoin has closed above the $25,250 zone on the daily and the weekly chart. I can’t stress how important that weekly close was. This was the sign many technical analysts were waiting for. Bitcoin remains bullish above $25,250 and the next resistance I have comes in at $32,000.
Bitcoin could see a pullback down to this zone for a retest before continuing higher.
With this move, many in the community are saying they are not surprised because Bitcoin is acting as it truly intended to be. Satoshi Nakamoto intended Bitcoin to be an alternative to the big banks.
The other side of the coin is that the Silicon Valley Bank had some exposure to crypto, and with the depositors being protected, led to this bitcoin bounce. But crypto sites are saying this isn’t the big cause for the Silicon Valley Bank issue:
The crypto industry has faced much criticism in recent times owing to a slew of high-profile collapses and losses for investors. However, in the case of SVB, crypto’s involvement was less causational and more due to counter-party risk on the part of stablecoin issuer Circle.
Following the downfall of SVB on March 10, USD Coin issuer Circle announced that nearly $3.3 billion of the reserves backing USDC were stuck in SVB.
The announcement drastically affected the stablecoin, which lost its peg to the U.S. dollar, eventually falling to $0.87. The depegging of USDC created a panic in the crypto industry as the stablecoin has the second-largest market share, and is popular among centralized and decentralized ecosystems.
The bank issues appear to be resolved for now, but anything can change at any moment. If this crisis continues, I would watch to see how Bitcoin reacts to all of this. Readers know that I have seen Bitcoin price action predominantly act as a risk on asset, meaning it follows the equity markets and sells off together with them when there is fear and uncertainty. Bitcoin hasn’t done this recently, and has followed alongside gold to the upside.
The Bitcoin bears would say this is just a pump on news rather than any run into perceived Bitcoin safety. That this pump will be a sell off.
Let’s take a look at other crypto charts.
Ethereum also broke out on Friday March 17th 2023, but after three days, there has been no follow through. Many will blame this on weekend liquidity. With the start of a new trading week, we shall see if buyers step in here with normal liquidity.
Litecoin was one of the many cryptos which did not take out previous resistance levels to nullify the current downtrend. Money has been running mostly into Bitcoin. Another leg lower is possible with Litecoin and many other cryptos showing the same technical set up.
You then have XRP continuing to be the outlier. The ‘bankers’ coin has remained stable throughout this volatility and remains contained within a range.