While Bitcoin’s (BTC) price action since the beginning of the year has been impressive, surging by over 80% since January due to several factors, the asset has plummeted in recent weeks for other reason that include the continuous regulatory scrutiny in the industry.
However, according to recent reports, the asset may just be gearing for another rally. In the last 24 hours, another major United States bank was reported to be facing a financial run signaling insolvency issue or bankruptcy.
Another Major Bank Collapse Could Impact Bitcoin Rally
According to the latest update, First Republic Bank (FRC) is currently experiencing a financial run as the bank disclosed it lost nearly $100 billion in deposits amid last month’s banking crisis. The bank said it is currently unloading between $50 billion and $100 billion in debt instruments as part of its “strategic options” to resolve the massive capital outflow.
However, the White House has expressed concern about a way to assist the bank out of insolvency, as reported by the Financial Times, which revealed that officials from the Biden Administration, the Federal Reserve, and the Treasury Department have consulted the bank’s top executives in the past few days.
Despite this, investors and traditional bankers seem to have begun panicking, searching for a safer haven or alternative for the store of value. Following the news, the First Republic shares plunged by more than 40% reaching an all-time low in Tuesday’s trading session.
Particularly, FRC shares hit an all-time low of $8.10 as the markets closed on Tuesday. Interestingly, while that happened, Bitcoin prices began to experience a bullish movement. This bullish movement can be attributed to the panic of traditional bankers seeing BTC as a bold alternative as major banks continue to collapse.
BTC Could Be Warming Up For Another Rally
The last time a similar banking crisis occurred in the US in March this year, Bitcoin reacted positively to the news and tapped $30,000 for the first time in nine months. And according to Bitcoin’s latest price action, the asset seems to be affirming expected price action based on past price action exposure to the banking crisis news.
In the last 24 hours, Bitcoin has recorded gains in its value, surging 7.5% with a market price of $29,817. Over $30 billion has been added to its market capitalization in the same period. Its trading volume has also surged indicating a buying pressure.
According to on-chain data provider Santiment, Bitcoin’s social dominance has increased compared to other altcoins in the market. Santiment noted this “happens during market euphoria or (in this case) fear.” The data provider further noted, “Prices can rebound quickly.”
Santiment is not the only one that anticipated Bitcoin’s rebound from its previous bearish price action. Popular crypto analyst Michael Van de Poppe stated:
Bitcoin isn’t looking bad on the higher timeframes. Healthy correction, and as long as Bitcoin sustains above $25,300 it’s likely we’ll continue this rally towards $42,000.
According to the analyst, as long as Bitcoin remains above $25,300, which it currently is as the asset trades above $29,000, Bitcoin will enjoy another rally to trade above $40,000.
Featured image from iStock, Chart from TradingView