BTC plunges below $25,000 as market debates over liquidity and TGA

Bitcoin and ether started the trading day in the red in Asia, with bitcoin falling 2.5% to USD 24,330 and ether falling 3.7% to USD 1,649.

Liquidity is on everyone’s mind, especially given the record withdrawals of the Treasury General Account during the Covid era, and more so after the bankruptcy of Silicon Valley Bank.

Most recently, something seems to have spooked the Federal Deposit Insurance Corp. when it replaced $40 billion in funds it took from the TGA, initially earmarked to mitigate market disruptions from the SVB shutdown.

As Reuters recently reported, the TGA fell nearly $100 billion over the past week before the FDIC got back its $40 billion.

“The TGA was incorporated over the course of 2023 and that helped markets in general, including bitcoin. But since the last five days, the TGA had nothing to do with bitcoin’s outperformance,” Mark Connors, head of research at 3iQ, told CoinDesk in a note. , but that it’s been validated at a level we’ve never seen before.”

Connors says this is a matter of confidence for the Fed.

“When you see the Fed create a bubble, pop the bubble and then don’t know what game to play through inflation or financial markets stabilize, that doesn’t inspire confidence,” he continued.

A bigger question, according to Connors, is price volatility, and the market hates uncertainty.

“The reason that matters is because rates are used to price every asset on the planet,” he said. “And when you have uncertainty about interest rates, you have uncertainty about what everything is worth.”

The next meeting of the Federal Open Market Committee is scheduled for March 21-22.

The volatility of Bitcoin and Ether is numbing both bears and bulls

Higher-than-usual market volatility impacted both bulls and bears as crypto futures traded $300 million in liquidations over a 24-hour period on Wednesday.

Liquidation refers to when an exchange forcibly closes a trader’s leveraged position due to a partial or complete loss of the trader’s initial margin. It happens when a trader cannot meet the margin requirements for a leveraged position (does not have sufficient funds to keep the trade open).

Large liquidations can signal the local top or bottom of a strong price move, allowing traders to position themselves accordingly.

Bitcoin and ether briefly rose above $26,000 and $1,770 respectively on Tuesday as investors brushed off the long-term effects of a regulatory constraint on crypto-friendly banks and US consumer price index (CPI) data pointed to slowing inflation in the coming months.

Bitcoin’s weekly chart shows that the cryptocurrency is once again struggling to gain a foothold above $25,000, which capped gains last month and into August 2022. According to chartered market technician Aksel Kibar, a breakout above $25,000 would shift focus to the next hurdle at $28,600. Christine Lee, host of “All About Bitcoin”, explains the “Chart of the Day”.

But the euphoria was short-lived as both major tokens fell as much as 5% from Tuesday’s highs before gradually stabilizing. In Asian morning hours on Wednesday, bitcoin was trading just under $25,000, while ether was trading just over $1,700.

The volatility caused losses of more than $140 million in bitcoin futures and $80 million in ether futures. Of these, 58% of futures losses came from shorts, or bets against price rises, while the rest came from longs, or bets on price rises – meaning both short sellers and long traders were affected almost equally.

Among other major tokens, futures on Conflux’s CFX tokens and Filecoin’s FIL had $8 million and $5 million in liquidations, respectively, as trading volumes for both surged on fundamental developments.

Meanwhile, some market observers said the price action came as investors looked for alternative assets following the collapse of Silicon Valley Bank last week.

“Bitcoin’s rally to a new yearly high as Silicon Valley Bank declines and inflation remains stubborn shows that investors are looking to bitcoin for stability in highly uncertain market conditions,” said Alex Adelman, co-founder of the bitcoin company. rewards app Lolli, to CoinDesk.

“While many have looked to bitcoin as a hedge against inflation and tracked price movements accordingly, bitcoin’s relationship to traditional finance is more complex,” Adelman stated, adding that bitcoin worked as an “alternative to the traditional financial system in general.” “.

“Weakness in the banking industry has increased investor awareness of bitcoin’s unique value proposition. In the coming weeks, we will continue to see increasing demand for bitcoin as a superior system for safekeeping and moving money,” said Adelman.

According to data from TradingView, bitcoin’s (BTC) dominance rate has risen amid increasing turbulence in crypto markets. This was because the Federal Home Loan Bank of San Francisco says it was not forcing Silvergate to repay advances, which is reportedly why the crypto-focused Silvergate decided to shut down. Lyn Alden Investment Strategy Founder Lyn Alden and Dunleavy Investment Research Crypto Strategist Tom Dunleavy joined ‘First Mover’.






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