FX.co ★ Bitcoin gains momentum

While investors in traditional assets vacillate between Fear and Greed, bitcoin is steadily rising. Since the beginning of the year, the token is up 71% and poised to close the quarter with its best result since 2021, when it hit all-time highs. It managed to survive the crypto winter, withstand regulatory pressure, and climb out of the hole it fell into due to the FTX bankruptcy. And the BTCUSD bulls have the banking crisis to thank.

Quarterly dynamics of Bitcoin

When investors are unsure about the bright future of crypto, they sell bitcoin and switch to stablebcoins and deposits. In contrast, cracks in the banking system trigger the opposite process. The bankruptcy of credit institutions in the U.S. has brought to mind that tokens were created as an alternative to fiat money, and the crypto industry is an alternative to banks. The latter are now under pressure on three fronts: funding costs are rising, asset values are falling, and regulatory scrutiny is increasing.

The latter is also true for bitcoin. Coinbase has received notice from the Securities and Exchange Commission (SEC) of the regulator's plans to take enforcement action against the largest cryptocurrency exchange in the U.S. However, unlike traditional assets, cryptocurrencies have no panic about an impending recession. Open interest and trading volumes are on the rise, indicating huge demand.

Cryptocurrency trading volume dynamics

If we look back at 2020, there was a short-term recession associated with the pandemic, then BTCUSD and the Nasdaq Composite were at their best. Countries went into lockdowns: they needed technology to do something at home. Something similar is happening at the present time. The index of technology companies looks the best in the U.S. It has grown since the beginning of this year by almost 13%, while the S&P 500 added only 3%, and the Dow Jones index sank by 3%.

Investors' fear of the coming recession is competing with Greed. Traditionally, when the Fed ended its monetary tightening cycle, it was a favorable time for earning assets. And the risk of missing a buying opportunity hangs over traders like a sword of Damocles. For now, they prefer bitcoin, which is positively affected by the decline in real U.S. Treasury yields and its good performance during the previous recession.

Nevertheless, we must keep in mind that the recession is different. It's one thing to sit at home on a bag of money received from the government, another to stand in line for unemployment benefits. The reaction of BTCUSD to a recession can also be very different.

Technically, bitcoin's upward trend in the AB=CD pattern is gaining momentum. Its 161.8% target is located near the 30,500 mark, but reaching it is unlikely to say that the token has exhausted its upside potential. In any case, we continue to adhere to the previously announced buying on pullbacks strategy.