Bitcoin BTC Price Holds Near $29,000 as Investors Weigh in on Rate Rise and Banking Contagion

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Bitcoin (BTC) spent much of Thursday hovering quietly just below $29,000, roughly where it has been for much of the past 10 days, as investors priced in rate hikes. US and European central bank interest and the latest debacles of a growing banking crisis.

The largest cryptocurrency by market capitalization was recently trading at around $28,800, down 0.3% in the past 24 hours, according to data from CoinDesk. BTC slipped below $29,000 on Thursday morning when US stock markets opened and remained between $28,700 and $29,000.

Ether (ETH), the second-largest cryptocurrency by market capitalization, followed a similar trend and changed hands around $1,877, down 0.6% from the same time on Wednesday. The prices of major cryptos were little changed during the day. The Litecoins LTC token was recently trading almost at around $87.8 while the Solanas SOL token slipped around 0.8% to trade at $21.70.

The CoinDesk Market Index (CMI), which measures the overall performance of the crypto market, rose 0.3% for the day.

Stock markets struggled with the S&P 500, Wall Street’s benchmark stock index, which closed down 0.7% on Thursday. The Dow Jones Industrial Average (DJIA) and the tech-heavy Nasdaq Composite were down 0.8% and 0.4%, respectively.

Shares of several regional banks fell, including those of Los Angeles-based PacWest Bancorp (PACW), down 50% Thursday afternoon and Phoenix-based Western Alliance Bancorporation (WAL), down 38% . Investors worried about contagion from the banking sector, which began in mid-March with the collapse of three banks, including Silicon Valley (SVB) and Signature.

In bond markets, the rating on the two-year Treasury yield, an indicator of short-term interest rate expectations, fell 15 basis points to 3.78%, near its lowest level this year. . The 10-year Treasury yield also slipped about 2 basis points to around 3.37%.

The financial crisis we seem to be sleepwalking into will almost certainly become real, Anthony Georgiades, co-founder of decentralized layer-1 blockchain Pastel Network, wrote in an email to CoinDesk.

Banks will have an even harder time now given that yield curves are so incredibly inverted,” he said. “And, in the end, it will probably force the [U.S. Federal Reserve] into urgent rate cuts and a return to something akin to quantitative easing, otherwise the economy and the bank itself will be in deep trouble.” He added that the latter scenario could support BTC.

Edward Moya, senior analyst at Oanda FX, wrote in a Thursday note that BTC is not seeing the same amount of flow as it did at the start of the whole banking drama with SVB.

This is getting very ugly for financials and should cause problems for the wider economy, Moya wrote. Bitcoin seems anchored until it gets regulatory clarity.

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