Bitcoin bulls attempt to break higher as Fed liquidity upends quantitative tightening in place since 2021.
Market Update
Bitcoin (BTC) hit new nine-month highs on March 17 as the latest events in the growing United States banking crisis boosted crypto markets.
Banking crisis volatility sees $27,000 BTC price
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting $27,025 on Bitstamp before consolidating.
At the time of writing, the pair circled $26,500 with volatility ongoing after the Wall Street open.
A catalyst for fresh upside had come in the form of the Federal Reserve’s balance sheet data overnight, this showing almost $300 billion being injected into the economy as part of the banking crisis response.
The event effectively undid months of liquidity removal under the Fed’s quantitative tightening (QT), and commentators were quick to call the restarting of the opposite phenomenon — quantitative easing (QE).
“They’ll tell you it’s not QE, but the numbers don’t lie. Roughly half of the reduction from a year of quantitative tightening has been erased in a week,” trader, analyst and podcast host Scott Melker, known as “The Wolf Of All Streets,” commented.
Bitcoin thus followed a strong performance for U.S. equities the day prior.
For market commentators, belief was there that the uptrend could continue despite stocks producing sideways action on the day.
“Bitcoin is trying to fly — this resistance line will break sooner or later,” popular analytics resource Stockmoney Lizards summarized about a chart showing a rising resistance trend line for BTC/USD.
Cointelegraph contributor Michaël van de Poppe, founder and CEO of trading firm Eight, eyed specific levels up and down.
“Chopperino land on Bitcoin, which means that we’ll probably have some sideways structures,” he told followers on the day.
“Needs to hold $26K. If that holds, $28–30K is next. If it loses $26K, I’m punting around $25K for some longs. Relatively easy to understand.”
Hayes: I’m ditching stocks for crypto
In his latest markets blog post, meanwhile, Arthur Hayes, former CEO of derivatives giant BitMEX, revealed a pivot of his own.
Related: Why is the crypto market up today?
In an extensive dissection of current Fed behavior and its potential consequences, Hayes concluded that Bitcoin was a firm haven — in contrast to stocks.
“For me and my portfolio, I’m largely done trading stonks. What’s the point? I generally buy and hold and don’t trade around my positions that frequently. If I believe what I wrote, then I am signing myself up for underperformance,” he revealed.
“If there is a short-term trading opportunity where I think I can earn some quick fiat duckets and then take my profit and buy more Bitcoin, I will do it. Otherwise, I am liquidating most of my stock portfolio and moving it into crypto.”
Hayes added that there was always a chance that he could be wrong about Bitcoin’s “upward trajectory” and that adjustments to his strategy would follow should that be the case.
“The end was always known in advance. YCC is dead, long live BTFP!” he concluded, referring to the Fed’s Bank Term Funding Program (BTFP) being a disguised form of Yield Curve Control (YCC) “repackaged in a new, shiny, more palatable format.”
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