Bitcoin and other financial assets now have a problem with Credit Suisse.
The Credit Suisse credit default swap signals that the company could collapse.
Credit Suisse’s share price fell as much as 20% and hit a record low.
Bitcoin Prices came under heavy pressure on Wednesday as banking sector came under severe stress. BTC recovered from the year-to-date high of $26,548 to a low of $24,526. It has retreated ~7.8% from its highest point this week.
Credit Suisse crisis deepens
Bitcoin price has been in a strong bullish trend over the past few days as investors reacted to the ongoing performance in the banking sector. After falling to a low of $19,500 last week, the coin made a spectacular recovery and reached a high of $26,548.
The rally followed the decision by US regulators to bail out major banks such as Silicon Valley Bank (SVB) and Signature Bank. They decided to provide a backstop for their depositors, many of whom were companies in the crypto industry as we wrote. Here,
The most important part of the bailout was the fact that it saved the USD Coin, the second largest stablecoin in the world. Circle, the parent company of USDC, had $3.3 billion in deposits with the company. Had it failed, the ripple effect on the crypto industry would have been dire.
Now, it looks like another bank crisis is upon us. Credit Suisse’s share price fell more than 20% after the company lost the confidence of another major investor. Earlier this month, Harris Associates, the company’s largest shareholder, decided to sell its entire stake.
And on Wednesday, the Saudi National Bank said it would provide no more finance to the company. Therefore, there are significant risks that the company will collapse. Indeed, its credit default swap has increased, indicating that investors expect the bank to collapse.
The collapse of Credit Suisse would be somewhat positive for the bitcoin price. For one, it would prevent interest rate hikes by the Fed and other central banks.
bitcoin price forecast
BTC/USD price reached a high of 26,548 on Tuesday before pulling back to a low of 24,102. As it dropped, BTC dropped below a key support level of $25,275, the highest point in February. On a positive note, the 50-day and 100-day moving averages of the pair have formed a bullish crossover. The coin also resembles a small head and shoulders pattern.
Therefore, I suspect that it will continue to decline towards the next key support at $23,000. A move above the key resistance point at 25,275 would invalidate the bearish view.
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