Bitcoin’s breakout performance in 2023 was partially a result of turmoil in the traditional financial markets following a spate of crises hitting Silicon Valley Bank, Signature Bank and, most critically, Credit Suisse.
A run on deposits saw investors turn to what they considered safe-haven assets to guard against further TradFi turmoil, with gold and bitcoin pipped as the short-term saviours.
Bitcoin surged as high as US$31,000 – an 80% year-to-date increase – by mid-April, only for a pretty sharp correction back to around 27k earlier this week.
Yet the spectre of TradFi volatility reared its ugly head once again in the form of First Republic Bank (NYSE:FRC) (one of the US’s premier regionals and among the most exposed to SVB’s collapse)’s latest earnings results.
First Republic’s shares dropped like a stone on Tuesday after disclosing unprecedented deposit outflows of 40% to $104.5bn in the quarter, a fair chunk worse than consensus estimates.
Conversely, bitcoin rallied close to 3% following First Bank’s disclosures, in something resembling an inverse relationship with the perceived health of the US financial sector’s mid tier. At the time of writing, the BTC/USDT pair was changing hands at US$28,700.
Bitcoin back above 30k? – Source: currency.com
While open interest in the derivatives market has not noticeably surged, the tick higher on bitcoin’s spot price implied a rush of inflows as investors seek to diversify.
Ethereum (ETH) joined yesterday’s rally by adding 1.3% to US$1,870, with an incremental reversal to US$1,860 in this morning’s Asia trading session.
ETH’s post-Shanghai price rally has largely been slashed, but the world’s second-largest cryptocurrency appears to be consolidating around the 1.8k mark, where substantial buying support is evident on the Binance order book.
Week on week, ether has underperformed against bitcoin, with 8% in losses racked up against bitcoin’s 3.5%.
Global cryptocurrency market capitalisation ticked 2.7% higher to US$1.18tn by the close of Asia trades.
Binance drops Voyager Digital (CSE:VYGR, OTCQX:VYGVF)
In other news, Binance.US haw ditched plans to buy bankrupt crypto lender Voyager Digital’s assets for US$1bn, less than one week after the courts gave it the go ahead.
The reason? Binance.US said: “The hostile and uncertain regulatory climate in the United States has introduced an unpredictable operating environment impacting the entire American business community.”
Voyager called it a “disappointing” development, but said it “will now move swiftly to return value to customers via direct distributions”.
This marks the second failed deal for Voyager, which was one of the most high-profile collapses throughout to crypto winter of 2022.
FTX initially agreed to buy out the group, but that deal fell through for reasons I don’t need to explain.
