In today’s Market Report episode, analyst and writer Marcel Pechman discusses whether Bitcoin’s (BTC) $28,000 support has a chance. Next, Pechman analyzes the First Republic Bank’s failure and its subsequent acquisition by JPMorgan. The show airs every Tuesday on the Cointelegraph Markets & Research YouTube channel.
The first news article explains why Bitcoin margin and futures indicators are essential to decide whether whales and market makers have flipped bearish as BTC failed to break the $30,000 resistance. For starters, Pechman explains why the $340-million liquidation in leveraged futures was important and how it affects the market during surprise price moves.
Using data from the OKX exchange on borrowing and lending markets, Pechamn shows how leverage was used to push Bitcoin’s price close to $30,000 on April 27 and how it played a key role in the subsequent decline to $28,000. Next, the analyst jumps to top traders’ long-to-short data provided by exchanges, which shows whales on OKX and Binance adding leveraged longs between April 25 and May 1.
The conclusion? Bears were not confident enough to add leveraged short positions, so bulls should not yet throw in the towel as margin and futures indicators remain healthy. Pechman reinforces that a dip down to $26,000 is possible, but data shows sellers are not willing to bet on such a move.
On to the show’s next topic, Pechman discusses the First Republic Bank (FRB) failure over the weekend. According to Pechman, it is definitely a bailout, as the United States Federal Deposit Insurance Corporation is getting emergency funding from the U.S. Treasury to cover the losses.
Why did Bitcoin react negatively to the event? In Pechman’s opinion, it could be two things: a) the news was already priced in, as Bitcoin rallied 7% between April 25 and April 29; b) investors interpreted the move as a strong signal from the government, meaning they won’t let any bank fail without a bailout.
Pechman’s take? The U.S. dollar has already weakened against other major currencies and will continue to devalue if the banking crisis creates other victims. Ultimately, no depositor is harmed, but the value of those dollars in the bank is worth less every month. That’s why Bitcoin will benefit, maybe not in the short term, but certainly in the span of one to three years.
In the last part of The Market Report, Pechman explains what the VIX S&P 500 volatility indicator is and why the recent 16% level, the lowest in 18 months, could mark a cycle top or low in the near term. The last time the indicator reached 15% was a month prior to the S&P 500’s all-time high in December 2021.