Bitcoin leads crypto rally as central banks promise liquidity to stem rising bank risk

Bitcoin jumped over the weekend to briefly breach US$28,000 in a bullish trend that extended into Monday morning trading in Asia and helped send most of the top 10 non-stablecoin cryptocurrencies higher. Bitcoin led the gainers amid growing concern about the state of the global banking industry. Several central banks over the weekend said they would coordinate an effort to pump cash into markets to ensure liquidity. This after Swiss authorities orchestrated an emergency weekend takeover of global investment bank Credit Suisse by UBS, which in turn followed a series of bank failures in the U.S. this month.

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Fast facts

• Bitcoin rose 2.96% in the past 24 hours to US$27,929 at 09:00 a.m. in Hong Kong to post a weekly gain of 23.24%, according to CoinMarketCap data. The world’s largest cryptocurrency has surged more than 66% from the start of the year and briefly traded above US$28,000 at the weekend, breaking that ceiling for the first time since June 12 last year.
• The main driver behind Bitcoin’s gains is concern about the fragile economic landscape in the U.S., Kadan Stadelmann, chief technical officer of blockchain infrastructure development firm Komodo, told Forkast on Friday.
• “The Federal Reserve embarked upon a many-trillion dollar quantitative easing program, cut the minimum bank reserves from 10% to 0% on March 26, 2020, and led us into the current bout with inflation, which has led people to seek alternative ways to preserve wealth. Bitcoin has become a prominent option,“ wrote Stadelmann.
• Ether dipped 0.02% to US$1,777, but is up 9.24% over the past seven days.
• XRP rose 2.61% to US$0.3874, up 3.04% for the week. Paul Grewal, chief legal officer at Coinbase, hinted in an interview with Thinking Crypto last Friday that Coinbase might relist XRP.
• Polygon’s Matic token fell 2.30% to US$1.16, slashing its gain for the week to just 0.23%, even after Polygon Labs unveiled a partnership with enterprise software giant Salesforce last Thursday to develop NFT-based loyalty programs.
• The bank turmoil dominated moves in capital markets and may force the Federal Reserve to revise its monetary policy of raising interest rates, adding to inflation risks and prompting more investors to see Bitcoin as a safe haven, according to a Bloomberg News report on Monday.
• The total crypto market capitalization rose 1.46% in the past 24 hours to US$1.17 trillion. Total trading volume over the last 24 hours dipped 2.70% to US$65.76 billion.
• Worries about the banking industry drove U.S. equities lower on Friday. The Dow Jones Industrial Average dropped 1.19%, the S&P 500 fell 1.10%, and the Nasdaq Composite Index moved 0.74% lower. Shares in First Republic Bank fell 32.80% on Friday despite a US$30 billion injection from major U.S. financial institutions earlier in the week.
• The Federal Reserve on Sunday announced a coordinated move with the central banks of Canada, the U.K., European Union, Japan and Switzerland to make more U.S. dollars available to improve market liquidity.
• The move to pump cash into markets helped U.S. stock futures edge up as of 9:00 a.m. in Hong Kong on Monday. The Dow Jones Industrial Average futures moved up 0.19%. The S&P 500 futures gained 0.28%, while the Nasdaq Composite Index rose 0.41%.
• On the inflation front, the University of Michigan reported on Friday an unexpected drop in the U.S. consumer sentiment index in March, the first decline in four months. The report indicates the Federal Reserve’s higher interest rate policy of the past 12 months is cooling off inflation.
• U.S. interest rates are between 4.5% to 4.75%, the highest since October 2007. Analysts at the CME Group expect a 76.8% chance the Fed will raise rates by 25 basis points when the bank meets this week, and a 23.2% chance of no rate hike, an increase from 20.3% on Friday.
• The U.S. consumer price index (CPI) rose 6% on year in February, a drop from 6.4% in January, but still well above the Fed’s goal to keep annual inflation below 2%.

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