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Bitcoin’s Four-Month Rally Loses Momentum Amid Banking Crisis and Market Uncertainty

Bitcoin’s impressive winning streak, which spanned four consecutive months, ended Monday, marking the lengthiest rally since 2021. The popular cryptocurrency experienced a 3.6% decline, dropping its value to $28,490 as of 7:02 a.m. in London. Concurrently, other digital assets, including Ether and Solana, faced similar downturns, as did an index of the top 100 cryptocurrencies.

A Good Start to 2023

The 72% recovery of Bitcoin in 2023, following the previous year’s crypto market crash, has reached a plateau around the $30,000 mark. Market participants eagerly anticipate further catalysts that could reignite the rally. 

Factors driving Bitcoin’s resurgence include expectations of the Federal Reserve adopting more flexible monetary policies and concerns that the US banking crisis has undermined trust in fiat currencies.

First Republic Bank Crisis Impacts Crypto Market Sentiment

First Republic Bank’s ongoing crisis is the latest development affecting the US banking sector. As regulators worked tirelessly to address the issue, the uncertainty reverberated throughout global markets. 

Adrian Przelozny, the head of crypto exchange Independent Reserve, remarked, “The market is very jittery as it waits to see what happens to First Republic Bank.” 

He attributed Monday’s Bitcoin dip to volatility related to the banking crisis, explaining that long positions were liquidated as the market dropped, leading to a cascading effect.

Bitcoin’s four-month rally through April is the longest since the six-month surge until March 2021. According to Bloomberg data, four-month winning streaks for Bitcoin have been followed by an average increase of 260% in the subsequent year.

Crypto Market Remains Vulnerable to Various Risks

Despite recent gains, Bitcoin and the broader crypto market remain susceptible to various risks. These include potential US regulatory crackdowns on the sector and the possibility that traders will scale back expectations for looser monetary policies later in the year.

For now, the Federal Reserve is anticipated to raise interest rates by another quarter percentage point on Wednesday to curb inflation, despite mounting economic risks.

As the Bitcoin market navigates through this period of uncertainty, investors and traders alike will closely monitor developments in the banking sector and monetary policies. In the meantime, the crypto community will be eager to see if Bitcoin can regain its momentum and continue its impressive growth.

JP Buntinx
JP Buntinx has been writing about cryptocurrency since 2012. His interest in crypto, blockchain, fintech, and finance allows him to cover a broad range of different topics.