Bitcoin gains momentum amid First Republic troubles and potential Fed reversal

Investing.com – Bitcoin’s recovery, which began last night, largely gained momentum on Wednesday, hitting a high of $30,028, the highest since April 19, and reversing most of last week’s losses.

For now, BTC/USD has slightly corrected to $29,840 but is still up 9% in 24 hours.

The main catalyst for the rise of Bitcoin this week was the troubles, which seems to be close to bankruptcy. Its shares fell 49% yesterday after the massive cash outflow became known, and on Wednesday they fell another nearly 20%.

Bitcoin and cryptocurrencies benefited from the banking crisis in March as financial system troubles highlighted the supposed benefits of decentralized cryptocurrencies.

As for today’s bullish acceleration, it could be driven by CNBC reports that First Republic has unveiled a plan whereby the government will pay above market value for First Republic bonds so that the bank can raise funds, but for now the government is reluctant to sit down at the table. negotiations.

Bitcoin may also have partially reacted to the hope of a potential Fed reversal. The implied chances of a rate hike next week have fallen to 75%, according to the Investing.com Rate Barometer, after nearly 100% last week. The probability of an additional rate hike in June fell from 27% last week to 10.7%. Worse, it now seems to be taking into account the possibility of two rate cuts before the end of the year.

Moreover, it should be noted that the dollar fell sharply on the back of these changes, while jumping to a new yearly high of 1.1093.

It is possible that Bitcoin also looks forward to a recovery in risky assets in light of strong tech earnings this week, including Microsoft (: ) and Alphabet (NASDAQ: ) last night. Remember that there is a strong correlation between Bitcoin and the Nasdaq.

Finally, from a charting perspective, it should be noted that the $30,000 threshold has only been tested for a short time, and therefore remains immediate resistance. The next target will be this year’s all-time high of $30,950, which was set on April 14, as well as the $31,000 psychological threshold. From a downside perspective, the $29,500 area is the first potential short-term support to $29,000.

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