- Bitcoin must maintain the crucial $26,500 mark, but momentum is declining.
- On the upside, the area of heavy resistance between $30k and $32,500 must be broken for the uptrend to resume.
- Ethereum has to pass the previous support turned resistance of $2150 for the uptrend to recover momentum, where it pulled off a false breakout and failed.
- The collapse of First Republic Bank, the second-largest bank to fail in the United States, was the greatest financial news on Monday.
- US banks have begun to lose deposits at the quickest and most consistent pace to date. Banks lost about $400 billion in deposits in March 2023 alone.
- The crypto market is under pressure as the Fed announces its interest rate decision today.
- The FOMC will most likely increase Fed funds by 0.25 bps, to 5.00 – 5.25 percent.
- The Fed began its cycle of rate hikes one year ago with a 25bp increase in March 2022.
- They have subsequently made this the quickest hiking cycle since the 1980s, fully outpacing the speed of earlier hiking cycles with numerous 75bp trips.
At higher levels, Bitcoin and other major cryptocurrencies are seeing intense selling, signalling that the bears are attempting to make a return. Bitcoin has climbed for four months in a row, from January to April, a milestone it last accomplished in 2013. In May, neither the bulls nor the bears have a distinct edge based on historical statistics. In May, the performance is evenly divided, with five good and five negative monthly closures.
Bitcoin’s rebound is hitting a stumbling block at $30,000, signalling that bulls are apprehensive of purchasing at higher levels. This might be due to the forthcoming Fed meeting on May 3, which has been known to boost short-term volatility. The S&P 500 index (SPX) has risen from a support level at 4,030 to an overhead resistance level of 4,200. The US dollar index (DXY) is attempting to break out of the range of 100.80 to 102.
As the Fed rate decision nears, the cryptocurrency market is under pressure. This week, all eyes are on the FOMC meeting, as the Fed must decide whether to raise interest rates or allow inflation to run wild. Following the recent failure of First Republic Bank, the U.S. banking crisis has intensified. This ongoing turmoil began in March when Silvergate Bank (SVB) and Signature Bank failed due to their extensive exposure to the volatile cryptocurrency market at the time.
US regulators acted swiftly to regain control by acquiring the institutions. However, the domino effect of the U.S. banking crisis continues. First Republic Bank (FRB) became the third significant bank to fail by the end of April. In March, the largest American institutions, including JP Morgan, Bank of America, Wells Fargo, Citigroup, and Truist, agreed to propose to the Federal Reserve Board a $30 billion rescue package.
Bitcoin Hashrate Hits an All-Time High:
Fundamentally, Bitcoin has reached a new high hashrate and increased network security. The network’s computational power is still increasing, showing that miners are still interested in engaging in block validation activities, even if the price of BTC remains indecisive as it ponders its next move.
There is also on-chain data that demonstrates remarkable strength for bitcoin’s blockchain architecture. On May 2, 2023, Bitcoin’s hashrate, or the network’s processing power, achieved a new peak of 491.15 EH/s at the top of block 787,895. With more miners providing processing power to resolve and include blocks, the network can tout unparalleled security, establishing itself as the world’s most secure blockchain. The computational capacity of the bitcoin network follows its own logic and is barely impacted by external variables like as the macroeconomic outlook of the markets, thus it might continue to increase even in a lengthy bear market condition.
Bitcoin Price Analysis:
According to the most recent price movement on the Bitcoin chart, the overhead barrier above $30,000 is being ferociously defended by the bears. The bulls are firmly guarding the resistance turned support level at $27,812 despite the price turning downward and collapsing on May 1. This means that for some time, the BTC/USDT pair may oscillate between $27,812 and $30,200. Typically, a trading range that is tight is followed by a range that is wider. The pair may drop to the critical support level of $24,719 if the price keeps falling and breaks below $$27,812.
The pair is more likely to increase to $31,000 and then to $32,500 if the range rises beyond $30,200. A breakthrough over this mark would indicate a gain in momentum. There will be more short-term volatility because of the forthcoming Fed meeting on May 3
Concluding Thoughts:
On Monday, the cryptocurrency market was under pressure due to the failure of First Republic Bank (FRC). Investors generally pulled back as they anticipated the Federal Reserve’s imminent interest rate announcement. The largest bank in the US, JP Morgan, will buy the business, according to a statement from the FDIC. First Republic’s demise makes 2023 the worst year for banks since the global financial crisis of 2008. Banks like Signature, Silicon Valley Bank, Credit Suisse, and Silvergate Bank have all collapsed in our lifetimes.
Because people are losing faith in the banking industry, these collapses could be advantageous for the cryptocurrency market. As a substitute for traditional financial institutions, many individuals may switch to stablecoins or cryptocurrencies like Bitcoin and ETH. Although Bitcoin will gain more from this transition than other altcoins, such as Ethereum, other cryptocurrencies will also profit because there is a positive correlation between them. Due to the collapse, the Federal Reserve will probably take the state of the banking industry into account when it begins its meeting on Tuesday. The financial crisis was a worry for various authorities, according to minutes that were disclosed last month.
There is a possibility that the Fed may consider pausing its interest rate policy at this meeting as a consequence. As an option, the ECB might decide to raise rates by 0.25% before declaring a strategic pause soon. A change in Federal Reserve policy might be advantageous for risky assets.
