Bitcoin Decline Sparks Trader Concerns as USDT Faces Selling Pressure on Curve and Uniswap
Crypto Global Bid and Ask Metric Plunges 20% Over Weekend, Indicating Extremely Low Liquidity Levels
Robinhood's Crypto Trading Volume Plummets by 68% in May, Reaching $2.1 Billion
Bitcoin (BTC) experienced a surge in value to reach $29,000 during morning hours in Europe on Wednesday. Some investors attribute this increase to expectations that the Federal Reserve will implement measures to boost the economy in the near future, in response to reports of a potential U.S. bank collapse. TradingView data confirms that this is the highest level Bitcoin has reached since April 20.
On Tuesday, First Republic Bank (FRC) witnessed a significant drop in its stock prices, plummeting by 50%. The San Francisco-based bank disclosed a startling decline in deposits, with investors withdrawing more than $100 billion this quarter. This development has raised concerns that First Republic Bank may become the third financial institution to fail, following in the footsteps of Silicon Valley Bank and Signature Bank.
The downward trend has put pressure on the US markets, resulting in a 1% drop in the Dow Jones Industrial Average and a nearly 2% decline in the tech-heavy Nasdaq 100. On the other hand, bitcoin has experienced a 6.4% increase over the past 24 hours, alongside safe-haven assets like gold, successfully reversing almost all the losses incurred from last week's sell-off.
The entire cryptocurrency market witnessed a 4.9% increase in its overall market capitalization, with major tokens such as cardano (ADA) and solana (SOL) experiencing a surge of over 7%, leading the gains among other tokens.
According to some analysts, the recent surge in the market can be attributed to expectations of a liquidity injection by the Federal Reserve, which is believed to be an effort to safeguard the capital markets.
"With First Republic Bank looking like it could go under, I suspect the market is anticipating yet more liquidity injections to prop up what certainly seems to be an American banking sector that is still very much in the throes of crisis," Jake Boyle, a director of retail crypto brokerage Caleb & Brown, wrote in an email to CoinDesk.
"Bitcoin, as a result, is front-running these expectations. Cracks in the financial system are growing, even if relatively subtly at the moment, and it’s going to be incredibly difficult for the Fed to adhere to its tightening regime going forward,” he said. "Bitcoin’s rally of late has more to do with liquidity injections and rising expectations that the Fed’s tightening will probably have to end fairly soon, or else even greater turbulence in the banking sector could ensue.”
Source Coindesk
