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Bitcoin rebounded sharply, surpassing the $22,000 region after the US government announced a plan to protect users with deposits at Silicon Valley Bank.
Bitcoin bounced off the $22,000 region, setting a local top at $22,600 with a 24-hour trading volume of $22.8 billion, along with almost 10% growth on the day.
The market’s largest cryptocurrency bounced back from the $19,850 support. However, if the market pulls back below this level, it can induce selling pressure and lead to a further decline towards $16,400.
On the other hand, a successful break above the $21,700 resistance level triggered strong buying, sending the price straight above $22,000. If BTC continues to close above the current area, the market can continue to maintain its upward momentum, with the next target at $23,175, even $25,150.
Total Crypto Market Cap (TOTALCAP) made a long wick below last week. This wick is important as it has kept the RSI from falling below 50.
However, the trend cannot yet be considered bullish. The reason for this is the deviation above the $1.04 trillion resistance area. A close above this zone is essential for confirmation of the uptrend. In that case, the next level of resistance would be $1.2 trillion. On the other hand, if the previous decline continues, the nearest support area will be at $800 billion.
Bitcoin price movement is very similar to TOTALCAP. However, this is even more important as BTC has managed to keep the RSI above 50 and avoid a breakdown from the $21,000 support area.
Currently, BTC is trading in a range of $21,000 to $24,500. Whether it breaks out or drops down will determine the future trend. A breakout can lead to a rally to $28,000 while a breakdown can take the price back to $17,000.
The altcoin market bounced strongly after BTC’s rally above the $22,000 region.
Most of the major altcoins are recording double-digit returns. Leading the rally are Synthetix (SNX) and Conflux (CFX), both of which are showing gains of more than 30% in just 24 hours, erasing almost all of the losses in the past week.Maker (MKR), Render Token (RNDR), Optimism (OP), Stacks (STX), Filecoin (FIL) are also projects that recorded an increase of more than 20% on the day.
Other altcoins in the top 100 such as ApeCoin (APE), Lido DAO (LDO), SingularityNET (AGIX), ImmutableX (IMX), Frax Share (FXS), Fantom (FTM), The Graph (GRT), Ethereum Classic (ETC) , Mina (MINA)… bounced from 15-19%.
After bottoming out at $1,368 during the recent drop, Ethereum (ETH) has turned around to rally strongly. Over the past 24 hours, the market’s largest altcoin has recorded a gain of nearly 10%, setting a local top at $1,622 and is currently trading around $1,600.
Stock futures jumped on Sunday night after regulators announced plans to protect all Silicon Valley Bank depositors and provide additional capital to other banks.
S&P 500 futures contract rose 1.1%; Nasdaq 100 futures rose 1.2%. Futures contracts tied to the Dow Jones Index rose 265 points.
All depositors at Silicon Valley Bank will have access to their funds starting Monday, according to a joint statement from the Treasury Department, the Federal Reserve and the FDIC.
“We are taking decisive actions to protect the US economy by strengthening public confidence in the banking system,” the joint statement said.
The US Federal Reserve (Fed) also said it is creating a Term Funding Program for Banks to protect deposits. This program will provide loans for up to 1 year to banks, savings associations, credit unions and other organizations. With that, the Fed said it would relax conditions at the discount window, using the same conditions as BTFP.
The major indexes had a strong week of decline after the collapse of SVB, causing shocks in the stock market. The Dow on Friday fell 345 points, or 1.07%. The S&P 500 lost 1.45% and the Nasdaq Composite lost 1.76%. All major indexes are in the red for the week, with the Dow finishing its worst week since June 2022.
Meanwhile, investors are looking at various economic reports this week. Tuesday’s consumer price index report is the last major inflation data release before the next Fed meeting on March 22. February retail sales and producer price index will also be released during the week.
“Financial markets face an adverse situation, caught between fear of depositors withdrawing funds at local banks and central banks’ concerns about high inflation,” said Barclays analyst Ajay Rajadhyaksha. written in the report to the customer.
In a surprising move, the Fed announced it would offer loans with maturities of up to one year to banks with safe collateral. This is a move that would, in theory, allow banks to respond to withdrawals of any size. The goal is to reassure people that they don’t need to cash out.
The Fed also revised its discount window, but with shorter maturities, similar to its temporary lending program. In the past, the Fed used to lend to commercial banks at rates above market rates, but now offers these loans at market rates.
Additionally, traders are reflecting a 67% probability of the Fed raising rates by 25 basis points in March 2023, but also expecting the Fed to cut rates by 75 basis points by the end of 2023.
Goldman Sachs now no longer thinks the Fed will raise interest rates in March 2023 because of the tension in the financial sector. However, the market still thinks the Fed will raise 25 basis points in March, according to the forecast of CME Group.
Last week, the yield on two-year US government bonds rose 5,085%, the highest since June 2007 – just before the sudden drop.
“When you slam on the brakes, you risk an economic and financial crash. We’ve just had a financial crash,” said economist Mohammed El-Erian on the show’s “Squawk Box” program. CNBC, referring to the Fed’s aggressive interest rate hike campaign.
Investors are keeping an eye on inflation data coming out this week. This will be the last inflation report before the Fed enters its policy meeting.
Earlier, Fed Chairman Jerome Powell said the extent of interest rate hikes in March 2023 will depend on the data. Mr. Powell said interest rates could rise higher than forecast.
Economists at Citigroup think the Fed will raise rates by 25 basis points next week instead of holding them.
“Doing that (keeping interest rates unchanged) only makes the market and the public think that the Fed’s determination to fight inflation will only last until there are problems in the financial markets or the real economy,” experts said. economist at Citi Andrew Hollenhorst said.
European stock markets plummeted 2.5% on March 13 as global investors assessed the impact of the collapse of Silicon Valley Bank (SVB). The Stoxx 600 Index fell 2.57%, the FTSE MIB plunged 4.25%, and the DAX fell 2.75%. All sectors were in the red, in which banking stocks fell 5.7%, followed by insurance and financial services.
The plunge in the European stock market continued despite HSBC’s agreement to buy the UK branch of SVB for £1. Depositors at the SVB branch in the UK will be protected as part of the agreement.
HSBC shares fell 3.5%, Commerzbank fell 12% and Credit Suisse fell 9.4%.
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