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Why is the crypto market up today?

March 17, 2023No Comments

The crypto market is bullish today as the impact of the current US banking crisis unfolds โ€“ the Federal Reserve has pumped $300 billion into the economy.

Data of Cointelegraph Pro Markets and TradingView displays bitcoin(BTC) up to 7%, Ether (ETH) 4.5% and Binance Coin (bnb) 5.7% in 24 hours.

A broad rally in crypto markets means Bitcoin is once again challenging the weekly highs, which also marked its best performance since June 2022. Can the bulls maintain momentum?

Nerves are palpable everywhere as the latest economic data shows just how far the Fed has gone to contain a banking crisis that some say is unlike any other.

Amid warnings that more banks could fail in the coming weeks and contagion spreading to Europe, it appears that cryptocurrencies are one of the few safe havens of the kind of turmoil reminiscent of the 2008 Global Financial Crisis (GFC). .

Cointelegraph takes a look at the main reasons why the crypto market is bullish today.

Fed Liquidity Pump Boosts Crypto Amid Claims QE Is Back

"It's the liquidity, stupid!" Popular markets commentator Holger Zschaepitz summed up the day as the data showed the true extent of the latest cash injections from the Federal Reserve.

The combined implosion of Silicon Valley Bank (SVB) and Signature Bank resulted in the Federal Reserve providing an emergency $297 billion, increasing its balance sheet for the first time since it began raising interest rates.

Your latest discount window loan has seen more banks take $150 billionwhat supposes a new record even surpassing the GFC of 2008.

Unsurprisingly, the reactions herald the end of quantitative tightening (QT), the process of removing liquidity from the economy, and a return to its opposite, quantitative easing (QE).

Such policy was previously enacted by the Fed after the GFC, as well as in March 2020 during the COVID-19 cross-market crash. In the years that followed, the US M2 money supply grew 46% before QT began, and Bitcoin went from less than $4,000 to almost $70,000.

"Last week the Fed's balance sheet increased by $300 billion, wiping out 4 months of QT in one week," gold expert Peter Schiff wrote in part of a twitter reaction.

"By the end of the month, the balance sheet could hit a new high. Rate hikes don't matter. Inflation is headed much higher, thanks to bank bailouts."

Like Cointelegraph reportedCrypto market performance was already sensitive to central bank liquidity trends, and not just in the US.

The more liquidity central banks inject into the global economy, the better, former BitMEX CEO Arthur Hayes reclaimed in February, and both the People's Bank of China (PBoC) and the Bank of Japan (BoJ) later followed suit this month.

in his last blog post Posted on March 16, Hayes, meanwhile, draws a striking contrast between March 2020 and this month's Fed fund to bail out banks from the brink, the Bank Term Financing Program (BTFP).

"The Fed printed $4.189 trillion in response to COVID. Right away, the Fed implicitly printed $4.4 trillion with the implementation of BTFP," he noted.

"During the COVID money printing episode, Bitcoin rose from $3k to $69k. What will it do this time?"

Fed balance sheet chart. Source: Holger Zschaepitz/Twitter

Bitcoin Takes Cryptocurrencies to a New Multi-Month High Test

Bitcoin price volatility may still be rampant, but the cryptocurrency message is becoming clearer: bulls are determined to undo the downtrend of the past eighteen months.

Related: Bitcoin dominance approaches 50% as research praises 'bullish' narrative turn

BTC/USD is trading at over $26,000 as of this writing, awaiting a retest of its nine-month highs from earlier in the week.

The combined cryptocurrency market cap is attempting to follow suit, up more than 3% on the day to $1.098 trillion.

Total crypto market capitalization 1-week candlestick chart. Source: TradingView

Commenting on the latest events, popular Crypto trader Tony remained modest in his outlook amid a still-reactionary Bitcoin trading profile.

"It's good to see some strength in Bitcoin this morning," he said. admitted.

โ€œI want to see this momentum hold today to clear the highs. Holding a range high of $25,200 is now the mission for bulls today.โ€

BTC/USD annotated chart. Source: Crypto Tony/Twitter

Meanwhile, trader and analyst Josh Rager eyed what could be a significant resistance/support reversal for Bitcoin on weekly time frames, fueling possible continuation. This comes in the form of the 200 week EMA.

โ€œEven with the lower time frames cutting back, the daily for BTC is looking good and showing strength,โ€ he tweeted on March 15.

"And if it pulls out, the weekly could close above the 200 EMA for the first time since June 2022."

BTC/USD (Bitstamp) 1-week candlestick chart with 200EMA. Source: TradingView

At the same time, trader and analyst Rekt Capital had hoped that Bitcoin could break out of a โ€œmacro downtrendโ€ pattern from the all-time high of $69,000.

"A break beyond BTC's macro downtrend would confirm a new bull market, and in turn confirm that November 2022 was the bottom," he said. aggregate.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, and you should do your own research when making a decision.