Yesterday, the price of Bitcoin returned to $28,000.
However, when Asian financial markets, and in particular Chinese financial markets, reopened, the price then fell back below that threshold.
Bitcoin: the rise of the price above $28,000
Ten days ago the price of Bitcoin was around or just below $20,000 due to the Silicon Valley Bank bankruptcy and the banking sector crisis.
Since then it has rallied +40%.
It is worth noting that the rise began on Saturday, 11 March, which is when the exchanges were closed. Indeed the sharp drop that occurred between 9 and 10 March occurred unsurprisingly at the same time as a sharp drop in the US stock markets as well.
However, with the stock exchanges closed for the weekend, the price of Bitcoin was able to breathe again, returning first to $21,000 and then also to $22,000, which is the price it had on 8 March.
Over the past week, the US stock markets rebounded slightly, probably due to the Fed’s intervention that prevented the banking sector from collapsing by flooding the markets with liquidity again.
But while the Nasdaq’s weekly rebound was only 5%, Bitcoin‘s rebound was more than 30%, eventually approaching $27,000 on Friday 17 March.
With the exchanges closed again for the weekend, Bitcoin’s price continued the climb that began a week earlier, crossing both the $27,000 level on Friday night and the $28,000 level on Sunday.
However, upon the sharply declining reopening of Asian exchanges, Bitcoin’s price returned below $28,000, probably because it was influenced by the trend in traditional financial markets.
The reasons for the bullish correction
In fact, as early as mid-February the price of Bitcoin had tried to break through the $25,000 wall, but failed. It made as many as four attempts within a week, only to fall back below $24,000.
At that point it seemed ready for a new breakthrough, but by 24 February it was back to being negatively affected by the performance of the traditional markets.
It is precisely because of the macro-level woes of the financial markets that, once back below $24,000, it was unable to recover that threshold until last weekend.
Indeed, back in early May it was dragged even below $23,000, with the final drop occurring because of the banking sector crisis in the second week of March.
A rebound was to be expected at this point, in case the problems in the financial markets found a permanent solution, or a temporary buffer solution such as the one that seems to have been found.
However, such reasoning can justify the return above $24,000, not the breaking of the $25,000 wall and the rise above $27,000.
To justify the latter part of the trend it is necessary to consider the monetary policy of central banks.
In particular, the Fed last week created $300 billion out of thin air, undoing four months of quantitative tightening in one fell swoop. In addition, other central banks have also resumed flooding the markets with liquidity, precisely to lend a hand to the banking sector, which is in crisis just about everywhere due mainly to high interest rates.
Such behavior has led many investors to consider Bitcoin a potentially good investment at this time, especially considering that its price does not yet seem particularly high.
The current level
The current reference level is precisely $28,000, as Bitcoin’s price is hovering right around that threshold.
This is a level not seen since 12 June 2022, and was also touched in mid-May of that year during the collapse caused by the implosion of the Terra/Luna ecosystem.
This is precisely why the main threshold of attention at this time seems to be the $29,000 that it held for a few days between mid-May and early June, i.e., before the Celsius bankruptcy. In those days the low was $28,500 and the high $31,800.
Incidentally, $28,800 was also the low peak touched in June 2021 after the momentary crash due to the Chinese ban on mining in the middle of the bull run. The other two minimum peaks in 2021 were the $29,300 on 19 July, and the $30,000 on 17 May.
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