Bitcoin Reacts to Banking Turmoil
Bitcoin enters the new week under pressure as the United States faces its second-largest bank failure in history. Following a quiet weekend, BTC dropped sharply after First Republic Bank was placed under receivership and taken over by JPMorgan Chase.
After falling below $29,000, Bitcoin’s volatility spiked at the start of the new weekly and monthly candle. According to Material Indicators, liquidity was pulled from Binance’s order book, causing a swift dip to $28,289 before recovering slightly.
Traders remain cautious, with multiple analysts pointing to $28,300 as a key short-term support zone. Without a decisive breakout above $30,000, many expect continued choppy action.
JPMorgan Steps In as Banking Turmoil Deepens
The failure of First Republic Bank has intensified concerns about the stability of the U.S. banking sector. The FDIC announced that JPMorgan Chase would assume all deposits after regulators seized First Republic, marking the second-largest bank failure in U.S. history.
The event adds to ongoing uncertainty ahead of the Federal Reserve’s next policy move. The market expects a 0.25% rate hike on May 3, but the combination of banking stress and recession fears complicates the outlook.
Former BitMEX CEO Arthur Hayes suggested the Fed will eventually be forced to backstop more banks, fueling long-term bullishness for Bitcoin as liquidity returns to the system.
Traders Eye Fed Decision for Next Move
For traders, the Federal Open Market Committee meeting this week represents a major catalyst. Historically, FOMC days trigger sharp but short-lived volatility across crypto markets.
Popular analyst Jackis noted that Bitcoin is likely to remain range-bound until Wednesday, predicting that the Fed’s decision could provide the “perfect impulse” for the next big move.
Despite recent weakness, Bitcoin ended April with a modest 2.8% monthly gain, maintaining its positive 2023 performance streak.
On-Chain Activity Signals Network Growth
On-chain data paints a bullish picture for Bitcoin’s long-term fundamentals. According to Glassnode, daily transactions are nearing all-time highs, driven by increased network activity, Ordinal inscriptions, and user participation.
“Conviction remains strong,” Glassnode analysts said, adding that Bitcoin’s uptrend “remains young,” though volumes have yet to fully support the rally.
Market Sentiment Nears Greed Levels
The Crypto Fear & Greed Index continues to hover near multi-year highs, reflecting growing optimism despite macroeconomic headwinds. However, analysts warn that market sentiment can shift quickly given current resistance zones for Bitcoin and Ethereum at $30,000 and $2,000 respectively.
