First Mover Americas: Bitcoin, as Safety Play, Climbs Past $28K
The latest price moves in crypto markets in context for March 20, 2023.
This article originally appeared in First Mover, CoinDesk’s daily newsletter putting the latest moves in crypto markets in context. Subscribe to get it in your inbox every day.
Bitcoin climbed 4% in the past 24 hours to above $28,000 for the first time since last June as some traders see the cryptocurrency as a hedge against the traditional banking system, which has had its share of troubles over the past few weeks, including the collapse of Silicon Valley Bank and regulators' takeover of Signature Bank. On Sunday, the Federal Reserve announced it had joined with other major central banks to ensure a steady flow of the U.S. dollar, a dominant reserve currency, in the global financial system. Bitcoin was up 25% this month through Sunday.
Non-crypto-related deposits held by former Signature Bank (now Signature Bridge Bank) will be assumed by Flagstar Bank, a subsidiary of New York Community Bancorp, as of Monday under a purchase and assumption agreement, the Federal Deposit Insurance Corp. said in a press release on Sunday. Signature Bridge Bank depositors – other than depositors related to the digital banking business – will automatically become depositors of Flagstar, and will continue to be insured by the FDIC up to the insurance limit. Flagstar Bank's bid didn't include $4 billion of deposits related to the former Signature Bank's digital banking business.
The dollar value locked in the number of open bitcoin futures contracts is rising, signifying increased speculative interest in the market and potential for price volatility. Data from Coinglass shows the nominal value of open interest has reached a yearly high of $12 billion, marking a 7% gain for the month. An increase in open interest means new money is flowing into the market but doesn't reveal much about whether traders are getting in position for price gains or losses. In bitcoin's case, the new money seems to be betting on price gains, considering the funding rate or the cost of holding bullish long/bearish short positions has flipped into the green after spending most of the early parts of the Asian trading day in the red.
Chart of the Day
- The chart shows bitcoin's rolling 30-day correlation with the U.S. Dollar Index, which tracks the greenback's exchange rate against major fiat currencies.
- The negative correlation has recently weakened amid U.S. bank failures that have complicated the Federal Reserve's fight against inflation.
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