Bitcoin Surges 6% to $29,000 as First Republic Bank Turmoil Boosts Bull Sentiment

Bitcoin (BTC) approached the $29,000 level on April 26 following overnight gains that marked a solid rebound.

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

Rising risk of a Bitcoin short squeeze

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD advancing rapidly during Asian trading hours, delivering a 6.5% gain against its local lows.

The pair began its recovery after the Wall Street open on April 25, amid fresh concerns regarding the stability of United States banks.

These concerns arose as First Republic Bank reported a dramatic decline in deposits, causing its share price to plummet by 50% on the day.

This banking crisis served as a familiar catalyst for crypto markets, reminding investors that such fears had persisted since March, with crypto analysts already predicting the next phase of the crisis.

When this bank bites the dust, probably later this week, we will be closer to the market realizing the entire US banking deposit base is de-facto guaranteed by the US government.
Massively Inflationary, which is why $XAU and $BTC are rising on news that FRC is a dead bank walking. https://t.co/LjSgjT5AJt

— Arthur Hayes (@CryptoHayes) April 26, 2023

Regarding the ongoing Bitcoin reaction, trading suite Decentrader warned that the market remained heavily short BTC, indicating a lack of trust in the durability of the uptrend.

“We’ve got Open Interest increasing and Funding Rate dropping, which shows that a lot of people are shorting this move,” it told its Twitter followers in an update.

Popular trader Crypto Tony was among the skeptics, revealing a hands-off approach and targeting around $28,900 to initiate a short position.

$BTC / $USD – Update
Currently out of the Bitcoin trade, so I am looking for another setup to reposition
I am looking for us to tap that high and close back below (Deviate) .. This would be a solid trigger for a short entry pic.twitter.com/my4nDM4i7c

— Crypto Tony (@CryptoTony__) April 26, 2023

Trading resource IncomeSharks also considered a short opportunity to emerge next.

“BBands getting tight, looks like we are probably [due] for a little explosive move to the upside,” a tweet read on the day, referring to Bollinger Bands volatility indicator cues.

“Hit the 4h supertrend resistance, then I’ll look to flip for a short to catch the downside if it looks weak.”

BTC/USD annotated chart with Bollinger Bands. Source: IncomeSharks/Twitter

BTC traders eye short opportunities near $29,000

While negative funding rates facilitated the potential for a “short squeeze” to liquidate bears, Decentrader added that data from monitoring resource Coinglass showed no extreme liquidation events for April 26 at the time of writing.

Related: ‘Smart money’ eyes BTC bull run: 5 things to know in Bitcoin this week

BTC liquidations chart. Source: Coinglass

“A strong bounce from the lows as expected, my Bitcoin longs are printing,” a more optimistic trader named Jelle wrote in an update, having gone long on BTC near $27,000.

“Expecting a minor dip into the area we just broke, before continuing higher. The 4h candles may look scary, but I’m not worried. 30k remains the target for this trade.”

BTC/USD annotated chart. Source: Jelle/Twitter

Adopting a long-term perspective, financial information resource Stockmoney Lizards also remained bullish.

“Bitcoin chart is easy to read. Very repetitive,” it argued regarding the 5-day BTC/USD timeframe.

“Bear market ended in 2022. BTC will continue to trend up (with minor pullbacks).”

BTC/USD annotated chart. Source: Stockmoney Lizards/Twitter

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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.