Bitcoin Climbs Above $28.5K as Investors Weigh Fresh Bank Woes, Cool Jobs Data

Ether also rose. Equity markets dropped, including stocks of two regional banks.

AccessTimeIconMay 2, 2023 at 11:10 p.m. UTC
Updated May 3, 2023 at 1:57 p.m. UTC

Bitcoin (BTC) rose during U.S. trading hours on Tuesday as investors contemplated the latest banking unrest and seemed to regain interest in crypto and other assets that hold value.

The largest cryptocurrency by market capitalization was recently trading at around $28,775, up roughly 2.6% over the past 24 hours, according to CoinDesk data. BTC’s price had hovered around $28,000 for most of the past day before jumping early Tuesday after shares of two regional banks, Los Angeles-based PacWest Bancorp (PACW) and Phoenix-based Western Alliance Bank (WAL), tumbled 27% and 15%, respectively. Meanwhile, the latest Job Openings and Labor Turnover Survey (JOLTS) arrived weaker than expected.

The failure of four U.S. banks, including First Republic earlier this week, has buffeted the economy but seemed to buoy crypto prices. The cool jobs data suggested that the economy was weakening and that inflationary pressures might subside, another potential boon to digital assets.

Ether (ETH), the second-largest cryptocurrency by market capitalization, also edged higher, by 2.5%, to change hands at around $1,877. The CoinDesk Market Index (CMI), which measures the overall crypto market performance, was up over 2% for the day.

Equities headed south during Tuesday's closing, with the S&P 500 trading down 1.1%. Both the Dow Jones Industrial Average (DJIA) and tech-heavy Nasdaq Composite dropped roughly 1%.

In bond markets, the yield on the two-year Treasury note – a gauge of near-term interest rate expectations – fell 16 basis points to sit around 3.94%. The yield on the 10-year Treasury note also fell, by roughly 14 basis points to 3.42%.

An April survey of 37 investors by CoinShares found that 64% believe the Federal Reserve has made a policy error, with another 22% saying “not yet,” implying that it is “quite possible the Fed may make a mistake in the near future,” according to CoinShares.

The study also found that despite a flurry of regulatory actions during the first quarter of the year, digital asset weighting in portfolios has risen to around 1.6%, up from 0.7% in October.

Ether remains the favored asset, a finding little changed from the last survey in January. “This is encouraging, having endured uncertainty surrounding the [Ethereum blockchain's] Shapella upgrade," CoinShares said.

Meanwhile, funding managers believe that BTC and ETH offer the most compelling growth outlook, with less of an appetite for altcoins, the survey said.

“Should the economy weaken further (risk-off) this would hurt ETH, causing ETH to underperform to the downside,” Greg Magadini, director of derivatives at crypto analytics firm Amberdata, noted in a recent newsletter. “A recession would cause the Fed to pivot and cut rates later this year (good for gold and BTC).”

Magadini said BTC should continue to outperform and increase market share.

Edited by James Rubin.


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Jocelyn Yang

Jocelyn Yang is a markets reporter at CoinDesk. She is a recent graduate of Emerson College's journalism program.