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Bitcoin falls towards $28K as US banking concerns and FOMC decision approach

In the Brief:

  • Bitcoin drops near $28K as US dollar gains strength ahead of Federal Reserve's interest rate decision
  • First Republic Bank sold to JPMorgan by US government, becoming the second-largest bank failure in US history
  • PacWest Bancorp's stock drops 7%
  • Traders anticipate a possible comedown before Fed's decision on interest rates
  • US equities remain stable

3 - 5 minute read

Bitcoin (BTC) is currently heading towards $28,000 support after the May 1 Wall Street open, as markets digest fresh United States banking jitters. BTC/USD 1-hour candle chart (Bitstamp) shows that Bitcoin is dropping to multi-day lows at the time of writing. The pair continued a comedown that began after the weekly and monthly candle close, shedding over $1,000 since that time. The start of the week saw a potential volatility catalyst during Asia trading as First Republic Bank was sold to JPMorgan Chase by the U.S. government, and amid suspicions over the legitimacy of the move, First Republic became the second-largest bank failure in U.S. history.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Despite the turmoil and potential looming continuation, U.S. equities were calm at the open, leaving crypto markets on the more volatile end of the risk asset spectrum. Reacting, traders considered the possibility of a comedown in advance of the Federal Reserve’s decision on interest rates due on May 3.

One asset, meanwhile, showing keen strength to start the week was the U.S. dollar, with the U.S. Dollar Index (DXY) challenging its highest levels since mid-April. Financial commentator Tedtalksmacro argued that markets should not “expect” the Fed to hint at a pivot or freeze of rate hikes at this week’s meeting, this in itself boosting the dollar and risk-off sentiment.

The Bottom Line

Traders must remain vigilant in the coming weeks, as the volatility of the market is expected to increase due to the Federal Reserve’s decision on interest rates and the instability of the U.S. banking system. It is advisable to conduct thorough research and exercise caution when making investment decisions.

Disclaimer: The content in this article is provided for informational purposes only and should not be considered as financial or trading advice. We are not financial advisors, and trading carries high risk. Always consult a professional financial advisor before making any investment decisions.

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