Bitcoin (BTC) may be heading towards the significant milestone of $100,000 as the narrative of it being “digital gold” gains traction amidst another impending banking crisis in the United States.
During the first quarter of 2024, at least 63 U.S. banks were teetering on the edge of insolvency, an increase from 52 banks listed on the “Problem Bank List” in the previous quarter of 2023, as reported by the Federal Deposit Insurance Corporation (FDIC) on May 29.
These banks collectively hold unrealized losses amounting to $517 billion, an increase of $39 billion from the previous quarter. This marks the ninth consecutive month of abnormally high unrealized losses, according to the FDIC report, which highlighted the growing concerns about the health of the U.S. banking system since the collapse of Silicon Valley Bank and the voluntary liquidation of Silvergate Bank in March 2023.
In response to these collapses, the Federal Reserve introduced the Bank Term Funding Program, offering loans to banks for up to a year in exchange for posting “qualifying assets” as collateral. This emergency measure kickstarted the Bitcoin bull run in 2023, as described by BitMEX co-founder and former CEO Arthur Hayes.
Bitcoin’s price surged by 26% from $21,900 to $28,054 in the week following these events. Since the onset of the banking crisis in March 2023, the price of BTC has increased by over 148%, currently trading around $70,000.
The FDIC report has lent further credibility to Jamie Coutts’ price action model, predicting solid support for Bitcoin above $63,000 before further upward movement. Coutts anticipates a breakout towards $100,000 based on historical chart patterns.
Additionally, the inflows from U.S. Bitcoin exchange-traded funds (ETFs) could also contribute to Bitcoin’s upward momentum, as evidenced by fifteen consecutive days of net positive inflows recorded on June 4. Institutional inflows from ETFs played a significant role in the recent Bitcoin rally to new all-time highs.
Despite the positive indicators, Bitcoin faces a substantial resistance at the $72,000 mark. A break above this level could lead to the liquidation of over $922 million worth of leveraged short positions, according to Coinglass data.
It is important to note that this article does not provide investment advice or recommendations. All investment and trading decisions involve risk, and readers should conduct their own research before making any decisions.