Market sentiment is mixed today, with U.S. index futures gaining slightly after Friday's declines. Also, sentiment in the European session is uncertain in the face of declining sentiment in China. The dollar index is trading down 0.2% today, which potentially allowed Bitcoin to catch its breath, but this time it is not the global sentiment that is at the 'root' of Bitcoin's price rebound. BTC seems to be gaining this time on a wave of concerns about China's regional banks, where problems may start with the Bank of Cangzhou:
'Chinese banks' helping Bitcoin?
- On October 30, the Hong Kong Tribunal will hold a hearing on the liquidation of Evergrande, an application has been filed by foreign creditors of the bankrupt giant - the market sees this as a real risk to end the case - with negative implications for markets and banks;
- There has been speculation of massive withdrawals from Bank of Cangzhou after unconfirmed information about several hundred million dollars in unpaid loans from Evergrande to the bank hit the web - depositors have been frightened by a 'liquidity hole'. Chinese services are investigating the dissemination of this information, found to be untrue - the bank relayed that in fact the loan is ten times lower and its business is healthy;
- China wants to ease bank stability concerns - The State Council issued guidelines on October 11 saying it would help municipal commercial banks and local financial institutions get rid of toxic assets and loans by replenishing their capital through available methods;
- An analysis by Bloomberg Intelligence highlights the $30,000 level as key for Bitcoin but increasingly tight liquidity conditions and recession risks indicate that risks prevail and declines could reach $10,000
- Meanwhile, the major cryptocurrency appears to be reacting today not so much 'along with market sentiment' as to the prospect of systemic risk from China's regional banks, whose exposure to the problematic real estate sector may be a concern and access to cash limited.
- Since Bitcoin is considered a decentralized asset - its transfer does not require the participation of banks and third parties - it could potentially react with increases to the increase in uncertainty in the banking sector.
- We saw a similar situation in the spring when banks in the U.S. collapsed, although at this point in China it is still uncertain whether the situation of Evergrande as well as the entire real estate market will end with the collapse of any of the major lenders.
Bloomberg Intelligence analysis indicates the USD 30,000 level as a key level for Bitcoin, but increasingly tighter liquidity conditions and the risk of recession mean that the risk of Bitcoin falling to $10,000 persist. At the same time on October 12, analysts estimated the probability of acceptance of Bitcoin ETF in 2023 up to 90%, which may also help sentiments of investors.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appBitcoin chart (D1)
Looking at the price and the chart, we can see that the Bitcoin rally was stopped at a key support level, which is marked by the SMA200 (red line) and the 23.6 Fibonacci retracement of the upward wave from the fall of 2022. The wick of the upward candle is lengthening, signaling the strength of supply at the level of $28,000 - however, if the bulls overcome this zone the nearest significant resistance will be only $30,000. In a downward scenario, the key level is still the $24,500 - $25,500 level where we see the 'oversold levels' from June and the level set by the local peaks of February and March 2023.
Source: xStation5
More and more miners (more than 50%) are using 'sustainable' energy sources to mine Bitcoin potentially making BTC itself an asset increasingly less burdened by ESG negativity. In 2019, it was only about 35%.
Source: Bloomberg Intelligence, Batcoinz
