The cryptocurrency market has been experiencing significant turbulence, with Bitcoin (BTC) at the epicenter of these price fluctuations. Bitcoin has been on a rollercoaster ride in the past weeks, from its price above $28,800 to drop below $27,000 and then back up. But why is Bitcoin’s price so volatile, and what are the potential future outcomes? Stay tuned as we delve deep into Bitcoin’s price movements and answer many questions.
The US Banking Crisis
A few weeks ago, two of the most crypto-friendly banks, Silvergate and Signature, collapsed due to a run on liquidity. Under similar circumstances, regulators also shuttered the Silicon Valley Bank (SVB), which held the funds of around 50% of all venture-backed tech startups. This resulted in the biggest banking collapse in the US since Washington Mutual in 2008.
The banking crisis has had several consequences for the global economy, such as increased inflation and reduced trust in traditional financial institutions. In response, some investors have sought alternative assets to hedge against these adverse effects. Due to its decentralized nature, limited supply, and global acceptance, Bitcoin came on top as a safe haven asset during these troubled times. Consequently, Bitcoin price has been surging recently, hitting a nine-month high of $28,803.
Regulatory Developments and Market Impact
Yesterday, the US Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance for running an alleged “illegal exchange.” The regulator sued Binance CEO Changpeng Zhao and former top compliance executive Samuel Lim, alleging willful evasion of US law. The ongoing regulatory saga has raised concerns about the potential implications for the broader cryptocurrency market. As one of the largest and most influential exchanges, Binance plays a significant role in the overall market sentiment.
As the CFTC investigates Binance for potential violations of US regulations, investors are closely watching the situation to gauge its potential impact on the market. The outcome of this battle could set a precedent for future regulatory actions against other crypto exchanges and projects, which may result in increased compliance costs and reduced market growth.
As the market digests these regulatory developments, Bitcoin’s price may continue to experience volatility.
Bitcoin’s Price Movements: Overview
According to trusted data provided by Gate.io crypto exchange, Bitcoin is continuously testing the $28,000 mark today. The cryptocurrency saw downward volatility the day before as news hit that the CFTC sued the world’s largest crypto exchange and its CEO. After the fall of FTX, the move didn’t come as a surprise as market participants are well aware of the crypto firms regulators are targeting.
Nonetheless, Bitcoin has managed to avoid significant losses. While some crypto analysts argue that the fallout from this lawsuit may be limited, others are concerned about Bitcoin failing to continue its upward momentum. With the key monthly close incoming, we have identified two important levels for bulls to protect and overcome. The first is the 200-week moving average (WMA) to the downside at a $25,500 and $30,000 resistance to the upside.
Is Bitcoin on Its Way to a New All-Time High?
Amid the current market volatility, some experts argue that Bitcoin’s ongoing consolidation is part of the cryptocurrency’s run to its new all-time high. For instance, Twitter user @tedtalksmacro pointed out that the current trading environment is similar to September – November of 2019. Back then, the Fed began expanding its balance sheet in September, cutting rates three times by October. Similarly, in 2023, the Fed began expanding its balance sheet in March and had 100 bps of rate cuts priced in by the end of the year.
Also, in 2019, Bitcoin’s price bottomed after moving 83% lower off the all-time high about 500 days before the 2020 halving. Similarly, Bitcoin prices have bottomed after moving 78% lower off the all-time high about 500 days before the 2024 halving. Going by the consistencies between the two cycles, it is quite probable that Bitcoin will hit a new all-time high soon.
In addition, the former Coinbase CTO Balaji Srinivasan says hyperinflation is happening now in the US. Expecting Bitcoin to hit $1 million soon, he has made million-dollar bets that it will happen in the next 90 days.
Conclusion
The current state of the Bitcoin market is marked by significant turbulence and volatility, influenced by factors such as the ongoing US banking crisis and regulatory challenges faced by major cryptocurrency exchanges. Despite the adverse effects of these events, Bitcoin has showcased its potential as a safe haven asset, attracting investors looking for alternative options amidst global financial uncertainty. According to leading crypto exchanges like Gate.io, the cryptocurrency’s market cap stands at around $504 billion, maintaining its position as the largest digital asset by market capitalization. Experts predict that while the current regulatory issues might lower Bitcoin’s price in the short term, it is bound to soar in the long term.
