Good morning. Here’s what’s happening:
Prices: A late surge returned bitcoin to its previous perch above $28K. Ether also rallied.
Insights: Is crypto on the mend? What will happen on the regulatory front? CoinDesk’s annual Consensus conference features crypto industry leaders and will cover key topics over three days.
Bitcoin Surges, but Will the Rally Continue?
After five days lingering below $28,000, bitcoin went for a surprising ride upward and took much of the rest of the market with it.
The largest cryptocurrency by market capitalization was recently trading above $28,300, up about 3.7% over the past 24 hours. The origins of the surge were difficult to pinpoint. BTC began ticking upward less than 24 hours after embattled First Republic Bank noted that it had lost $100 billion in deposits during its first quarter earnings presentation on Monday, reviving concerns about the banking sector’s stability. Last month, cryptos rose amid a rash of U.S. regional banking implosions as investors sought refuge in assets that hold their value.
“With First Republic Bank looking like it could go under, I suspect the market is anticipating yet more liquidity injections to prop up what certainly seems to be an American banking sector that is still very much in the throes of crisis,” Jake Boyle, director of Caleb & Brown, a retail crypto brokerage, wrote in an email to CoinDesk. “Bitcoin, as a result, is front-running these expectations. Cracks in the financial system are growing, even if relatively subtly at the moment, and it’s going to be incredibly difficult for the Fed to adhere to its tightening regime going forward.”
Boyle added: “Bitcoin’s rally of late has more to do with liquidity injections and rising expectations that the Fed’s tightening will probably have to end fairly soon, or else even greater turbulence in the banking sector could ensue.”
Data from analytics firm Coinglass also showed that some $11.3 million of BTC short positions had been liquidated since 4 p.m. Short squeezes have historically tended to accelerate price jumps.
Ether was recently changing hands at about $1,870, up 1.8% from Monday, same time. Other major cryptos were largely in the green with SOL, the native token of the Solana blockchain, and ADA, the native crypto of the Cardano smart contracts platform, both recently rising more than 3%. The CoinDesk Market Index, a measure of the crypto market’s overall performance was up 2.6%.
In early Asia trading, the Nikkei and Hang Seng indexes were down slightly. U.S. stocks closed down with the tech-heavy Nasdaq Composite off nearly 2%.
In his weekday column, CoinDesk analyst Glenn Williams highlighted that at least two technical indicators were foreshadowing a bitcoin rebound. Williams noted that BTC’s “recent decline accompanied an expected drop in momentum, but it also occurred in conjunction with a move towards the lower end of the Bollinger Band. Bollinger Bands plot an asset’s 20-day moving average, and calculate two standard deviations above and below the average. An asset’s price is expected to stay within two standard deviations of the average 98% of the time, so a breach above or below is noteworthy.
Williams wrote that “bitcoin approaching the lower range of its Bollinger Bands raises questions about its near-term path, but he added that “given recent history, technical analysts could expect BTC prices to advance, albeit methodically, back to their 20-day average.”
What to Expect at Consensus
Crypto is down but not out. The industry that took a beating last year is set to make its first major public showing of 2023 at Consensus, CoinDesk’s annual conference. Many of the biggest names in crypto, government, Web3 and more will be in Austin, Texas, this week to discuss the current state of the industry, the devastating year it just had and what the future may hold.
On that score, things are looking up. If the first four months of the year are any indication of where the industry is heading, the rebuilding has begun.
Still, there’s much more building, policymaking, educating and, yes, investing to be done. While recent markets have given some reason for optimism, fraud and contagion have absolutely smashed consumer confidence in the industry. Regaining that trust will be difficult, but that is the opportunity at the feet of today’s builders, regulators and decision makers – many of whom will share their views at Consensus.
Here’s what to expect this week in Austin.
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Crypto exchange Coinbase has asked a federal court to force the SEC to respond to a petition it filed last year asking for formal rulemaking within the digital assets sector. This came as Republicans on the House Financial Services Committee are taking another swing at stablecoin legislation with a discussion draft revealed Monday afternoon. Rep. Patrick McHenry (R-N.C.) joined “First Mover” to discuss.