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Abstract: Bitcoin prices traded above US$28,500 after plunging 10% this week. After the recent banking crisis, bitcoin prices pulled out of the stock market and rebounded at the end of the first quarter. Now, with the decline of the First Republic Bank and how it could trigger another crisis, the likelihood of similar events is growing. Bitcoin prices rose accordingly.

Fundamentals

Bitcoin's intraday rebound benefited from the decline of First Republic Bank, whose stock, FRC, has plunged nearly 50% in the past 24 hours. The overall decline since early March was 93.32%. At the close, the FRC was trading at US$8.10.

One of the biggest reasons for the FRC crash was reports that it was facing a US$ 100bn outflow of deposits. According to Monday's announcement, the drop in inflows surprised everyone as their deposits fell by 40% in the first quarter of this year.

To add insult to injury, there are numerous reports that the U.S. government would take over the FRC.

According to a Fox reporter's tweet by Charles Gasparino, bankers working with the FRC expect the government to eventually take over this troubled bank.

However, this will only happen after it has exhausted all private sector solutions, such as selling assets and finding buyers. This seems very difficult. Officials at the big banks believe the Federal Reserve was preparing to take over the FRC last week, just before its earnings announcement depressed share prices.

Although most other U.S. banking stocks remain strong now, investors may have begun to weigh the possibility of another banking crisis, according to results released one after another. This is reflected in the Federal Reserve's next rate hike forecast next week. In the past 24 hours, the probability of a 25-basis-point rise has fallen from 90.5% to 76.6%.

Interestingly, the U.S. Dollar Index has not been adversely affected by the bank stock crash, which is a good sign given that confidence in the currency is weakening. However, the stock market did suffer. Major U.S. stock indexes closed Tuesday off their intraday lows. The Dow Jones index fell 1.0%, the Nasdaq index fell 2.0%, and the Standard & Poor's index fell 1.6%.

However, the impact of these positive developments is reflected in the bitcoin price; As of posting the article, the price of bitcoin has risen nearly 6% to US$29,142. After plunging 10% in the past few trading days, investors expect bitcoin prices to adjust longer before the recovery begins, but the collapse of FRC rekindled the "safe haven" narrative.

In addition, Indonesia's support for cryptocurrencies in promoting trade diversification has also played a role in fueling the situation.

Perry Warjiyo, governor of Bank Indonesia, announced that Jakarta is following in the footsteps of the BRICS group, reducing its dependence on the US dollar and promoting the diversification of currency used in international trade.

Indonesia is "more specific" than the BRICS countries because they have implemented currency diversification methods with Thailand, Malaysia, China, and Japan.

As the U.S. continues to weaponize the USD, other countries are looking for alternatives. It seems likely that the USD will soon have to share the dividends of "currency use rights" with other currencies. The search for alternatives will have a positive impact on the encrypted money market as investors hope to profit from it ahead of time.

Technical Analysis

Bitcoin is on the rise after days of consolidation in key demand areas. As long as bitcoin prices remain above the March 26 low of US$27,329, the upward trend will remain unchanged.

As can be seen from the 4-hour timeframe, the correction in prices, which started at a high of US$31,000 on April 14th, is likely to have been completed. As a result, bitcoin prices are likely to start the next rally, which will be a continuation of the bullish trend in a higher timeframe.

Based on the current price trend, bitcoin is likely to continue its bullish trend to the first resistance level of 30350.

The first support level is at 27205, which is an overlapping support level. If the bullish trend continues, this level of support is expected to remain unchanged. However, if the price falls below this level, the next level of support is at 26508, which is also overlapping support, which is consistent with the 38.20% Fibonacci retracement. It is recommended to buy at the lows.

Trading Recommendations

Trading direction: Long

Entry price: 29000

Target price: 37150

Stop loss: 25000

Deadline: 2022-05-10 23:55:00

Support: 28383, 27329, 26550

Resistance: 29187, 30350, 37150