Sam Cooling
Crypto markets surges as Fed injects $300bn amid banking crisis – as situation with Credit Suisse worsens in light of ECB rate hike.
The cryptocurrency market is on the rise today, with Bitcoin (BTC), Ethereum (Ethereum), and Binance Coin (BNB) posting gains of 7%, 4.5%, and 5.7% respectively in the last 24 hours.
QE is Back!
About $300 billion in assets added to Fed balance sheet in the last week pic.twitter.com/a46TLAkFwr
— Genevieve Roch-Decter, CFA (@GRDecter) March 16, 2023
This surge comes as the United States Federal Reserve pumps $300 billion into the economy to address the ongoing banking crisis, a move reminiscent of quantitative easing (QE).
Bitcoin is back to challenging the week’s highs, marking its best performance since June 2022. As more banks face the risk of failure and the crisis potentially spreads to Europe, cryptocurrencies emerge as one of the few safe havens from the turmoil.
The Fed’s liquidity injection has come in response to the combined collapse of Silicon Valley Bank (SVB) and Signature Bank, leading to a $297 billion growth in its balance sheet.
The record $150 billion borrowed through the discount window even surpasses the amount borrowed during the 2008 Global Financial Crisis (GFC).
The end of quantitative tightening (QT) and the return to QE, a policy previously enacted by the Fed following the GFC and the COVID-19 market crash, is expected to drive inflation higher.
As I predicted #QE is back. Last week the #Fed's balance sheet swelled by $300 billion, wiping out 4 months of QT in one week. By the end of the month the balance sheet could reach a new high. Rate hikes don't matter. #Inflation is headed much higher, thanks to #bank #bailouts.
— Peter Schiff (@PeterSchiff) March 16, 2023
Central Bank Liquidity To Boost Crypto Markets
Notably, Bitcoin’s value surged from under $4,000 to nearly $70,000 in the years following the U.S. M2 money supply’s 46% growth before QT commenced.
NEW: Massive #BTC logo projected in Berlin, Capitol city of Germany pic.twitter.com/3W89hxEfyx
— Bitcoin News ⚡ (@BitcoinNewsCom) March 17, 2023
As central banks worldwide pump more liquidity into the global economy, the crypto market is set to benefit.
Bitcoin’s price, currently trading at over $26,000, is eyeing a retest of its nine-month highs. The combined cryptocurrency market cap has increased by more than 3% to $1.098 trillion.
Despite the still-reactionary Bitcoin trading profile, the market appears determined to reverse the downtrend of the past eighteen months.
Analysts predict potential continuation if Bitcoin manages to close above the 200-week exponential moving average (EMA) for the first time since June 2022.
A breakout from the macro downtrend in place since the $69,000 all-time high would signal a new bull market and confirm November 2022 as the bottom.
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This article was written for Business 2 Community by Sam Cooling.
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