Bitcoin drops below $28k as First Republic Bank faces seizure; Investors await FOMC interest rate decision
Bitcoin, the largest cryptocurrency by market capitalization, dropped below $28,000 on Monday, continuing its downward trend that started on Sunday. This happened as federal regulators were preparing to take over First Republic Bank, which is the fourth bank to fail in the past two months. The cryptocurrency was trading at around $27,900, down over 5% in the past 24 hours, according to trading view data.
Meanwhile, JPMorgan had won the auction to purchase First Republic's assets, indicating that the banking sector was prepared to address such crises. This could have made investors more confident in the banking system, reducing the case for cryptos.
Ether, the second-largest cryptocurrency by market capitalization, followed a similar pattern to bitcoin, dropping more than 4% to trade around $1,820 on Monday.
Investors are eagerly waiting for the Federal Open Market Committee (FOMC) meeting, which starts on Tuesday, to decide whether to increase interest rates and by how much. The CME's FedWatch tool currently sets the probability of a 25 basis point increase at over 94%, which would raise the target range to between 5% and 5.25%. Some analysts predict that this decision may cause price fluctuations in the crypto market.
As per the analysis of cryptocurrency analyst Pankaj Tanwar, Bitcoin has breached its critical support level of 50-day moving average (50 MA) and tested the Fibonacci retracement level before rebounding from that point. Currently, the support zone of $27,500 - $28,000 holds significant importance. If this support level fails to hold and any adverse news emerges from the upcoming FOMC meeting, then Bitcoin's price may plummet further and test the crucial support level of the 200-weekly moving average, which is expected to offer robust support.
In conclusion, the downward spiral of bitcoin continued on Monday as federal regulators prepared to seize control of First Republic Bank. Ether followed a similar trend, and equities also closed lower. Investors will be closely watching the FOMC meeting, as it may cause fluctuations in the crypto market.
Disclaimer & Suggestion : Please always do your due diligence before investing in any cryptocurrency or project. This must not be treated as financial advice.