• After the collapse of SVB, markets are expecting a Fed pivot to lower interest rates sooner than expected.
• CryptoQuant analyst Cristian Palusi suggests that this liquidity crisis could be a “long-awaited buy signal” for Bitcoin.
• Gold and Bitcoin have both seen rises in prices, with gold nearly hitting $2000 and Bitcoin reaching a 9-month high of $27,000.

Liquidity Crisis Could Signal Bottom of Bitcoin

The banking crisis following SVB’s collapse has the market pricing in lower interest rates far sooner than previously expected. Markets are starting to price in an incoming Fed pivot as bank instability forces central banks to protect the financial system. Analysis from CryptoQuant analyst Cristian Palusi suggests that the liquidity crises now plaguing commercial banks may be a „long-awaited buy signal“ for Bitcoin.

Coinbase Premium

Coinbase (COIN) has risen over 37% over the last 5 days, and is known to be tightly correlated with the crypto asset market that it enables trades for. „Initially the spread could have had a double interpretation following the depeg of USDC, in light of the recent price action it is clear that instead the premium indicated the enormous buy pressure on th
e market,“ noted Palusi.

Implied Federal Funds‘ Policy Rates Shortened

The implied federal funds‘ policy rates have severely shortened their time frame for when they think the central bank will first cut rates again, from Q1 2024 to June 2023. Meanwhile, gold and Bitcoin are on the rise: The precious metal surged to nearly $2000 as of Friday, while its oft-considered digital successor rose to another 9-month high of $27,000.

Bitcoin Buy Pressure

Palusci believes that this increasing buy pressure on Bitcoin indicates it may finally be bottoming out after months of bearishness following its all-time highs at near $64k earlier this year. He said: “At this point I am more confident than ever that we are seeing a long awaited buy signal emerge from institutional investors who missed out on previous rallies”. With stocks still showing signs of weakness due to uncertainty surrounding COVID-19 vaccines and treatments, many investors appear to be turning towards safe havens like gold and bitcoin as they look for stability during these turbulent times.

Fed Pivot Not Far Away

According to Palusci’s analysis, an incoming Fed pivot could help further bolster cryptocurrency prices if it leads to increased investor confidence or even encourages adoption among institutional investors looking for alternative investments outside traditional markets during times of volatility . As such , it appears likely that bitcoin may continue its upward trajectory if these trends continue , especially given its positive performance so far this year despite some periods of bearishness .