The largest crypto currency by market capitalization dropped to $23,946 at one point before regaining ground to recently trade at $24,502, roughly flat over the 24 hours
Bitcoin dipped below $24,500 as investors considered a probable European banking meltdown sparked by worries about often-embattled Credit Suisse.
The biggest crypto currency in terms of market capitalization declined to $23,946 at one time before recovering to recently trade at $24,502, nearly flat over the 24 hours. But that was still well off bitcoin’s highs of the previous day when it surged past $26,000 following the release of a slightly upbeat Consumer Price Index (CPI) inflation data for February. The 6 per cent Consumer Price Index improved on the previous month’s data and offered investors looking for more monetary policy dovishness hope the U.S. Federal Reserve would at least for now halt its recent interest rate hikes.
On Wednesday, banking problems upstaged monetary policy considerations.
Shares of the Swiss banking giant Credit Suisse (CS), which has been hit by misconducts over the past year and posted losses for five quarters in a row, dipped on Wednesday after the bank’s biggest investor, Saudi National Bank, said it would not invest capital beyond the $1.5b it sank into the bank in 2022. Saudi National Bank owns a stake of up to 9.9 per cent.
The Swiss National Bank appeared to at least temporarily stop the damage after declaring it would provide Credit Suisse with liquidity ‘if necessary,’ and disapproving the view that contagion linked to the failure of two, big U.S. regional banks over the past week had spread overseas.
Credit Suisse shares dipped 13 per cent, as did a number of European banking stocks including French banks BNP Paribas and Societe Generale, which dropped by 8 per cent and 10 per cent, respectively. European markets dipped as investors in riskier assets grew skittish.
U.S. equity markets initially dipped on the banking news coming from Europe before recuperating some of their losses. The S&P 500 and Dow Jones Industrial Average dropped 0.7 per cent and 0.8 per cent, respectively. But the tech-heavy Nasdaq Composite increased 0.05 per cent.
Regional banking stocks also tumbled, with First Republic Bank (FRC) and PacWest Bancorp (PACW) falling 21 per cent and 13 per cent, respectively.
Credit Suisse is a bigger story than Silicon Valley Bank (SVB) and this has Wall Street immensely edgy, according to ​​Edward Moya, senior market analyst at foreign exchange trading platform Oanda. Bitcoin’s drop is not that bad when you take into account how much pressure is hitting stocks, oil prices and the euro.
While banking chaos could eventually become a bullish moment for bitcoin, ‘for now crypto weakness is justified,’ Moya further said.
In the meantime, the CME FedWatch Tool showed that at present nearly 55 per cent of traders think the Fed will not increase interest rates at its next Federal Open Market Committee (FOMC) meeting starting March 22. A further 45 per cent expect the Fed to raise the rate by 25 basis points (bps), a sharp difference from a week ago when a growing number of observers felt the Fed would raise the rate by 50 basis points.
