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In the latest episode of Market Report, analyst and writer Marcel Pechman examines the potential of Bitcoin’s (BTC) $28,000 support level. Following this, Pechman evaluates the collapse of First Republic Bank and its subsequent takeover by JPMorgan. The program is broadcast every Tuesday on the Cointelegraph Markets & Research YouTube channel.
The initial news article outlines the significance of Bitcoin margin and futures indicators in determining whether whales and market makers have adopted a bearish stance, particularly after BTC was unable to surpass the $30,000 resistance. To begin, Pechman discusses the relevance of the $340-million liquidation in leveraged futures and its impact on the market during unexpected price fluctuations.
Utilizing data from the OKX exchange regarding borrowing and lending markets, Pechman illustrates how leverage was employed to elevate Bitcoin’s price near $30,000 on April 27 and its critical role in the subsequent drop to $28,000. He then shifts to the long-to-short data from top traders provided by exchanges, revealing that whales on OKX and Binance increased their leveraged long positions between April 25 and May 1.
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The conclusion? Bears lacked sufficient confidence to increase leveraged short positions, suggesting that bulls should not yet concede defeat, as margin and futures indicators remain robust. Pechman emphasizes that a decline to $26,000 is feasible, but data indicates that sellers are hesitant to wager on such a scenario.
Moving on to the next subject of the show, Pechman addresses the failure of First Republic Bank (FRB) over the weekend. According to Pechman, this situation qualifies as a bailout, as the United States Federal Deposit Insurance Corporation is receiving emergency funding from the U.S. Treasury to mitigate the losses.
What caused Bitcoin’s negative reaction to this event? Pechman suggests two possibilities: a) the news may have already been factored into the market, given that Bitcoin surged 7% between April 25 and April 29; b) investors may have viewed the action as a strong government signal, indicating that no bank will be allowed to fail without a bailout.
Pechman’s perspective? The U.S. dollar has already depreciated against other major currencies and will likely continue to lose value if the banking crisis affects additional institutions. Ultimately, while no depositors are adversely affected, the purchasing power of those dollars in the bank diminishes each month. This scenario is expected to benefit Bitcoin, potentially not in the immediate future, but certainly over the next one to three years.
In the final segment of The Market Report, Pechman clarifies what the VIX S&P 500 volatility indicator is and why the recent level of 16%, the lowest in 18 months, could signify a cycle peak or trough in the near future. The last time the indicator hit 15% was a month before the S&P 500 reached its all-time high in December 2021.
