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Bitcoin daily

Bitcoin is in the midst of its best day in almost a month. It’s up 2.3%, or $752 to $29,925 as it threatens to retake $30,000 for the first time in a week.

The catalyst for the buying appears to be the Moody’s downgrade of several medium-sized US banks and threats to cut larger once. The Bank of New York Mellon, US Bancorp, State Street and Truist Financial were all put on review for downgrades following downgrades to 10 smaller banks.

“Many banks’ second-quarter results showed growing profitability pressures that will reduce their ability to generate internal capital,” Moody’s said in a note.

“This comes as a mild U.S. recession is on the horizon for early 2024 and asset quality looks set to decline, with particular risks in some banks’ commercial real estate (CRE) portfolios.”

I certainly wouldn’t argue with that reasoning and hold-to-maturity losses make it difficult to raise money via debt.

During the peak of the banking troubles in March, Bitcoin made one way move to $28,000 from $20,000 and later continued to $30,000. Signs of fresh trouble are likely aiding the price action today.

Technically, Bitcoin found something of a bottom near $28,500 as it bottomed there last week and again this week. That’s a sign of a double bottom that would target $31,000.

In the bigger picture, Bitcoin bulls are excited about signs of a potential ETF approval as filings continue to roll in for BTC and ETH exchange-traded products. Reports have suggested the SEC is at least open to considering allowing ETFs and that’s something that would clear the way for Americans to own crypto in retirement accounts more easily.

For broader markets, strength in Bitcoin sometimes signals burgeoning optimism so there’s a potential buy-the-dip mantality that could be unfolding, though I lean towards banking troubles as the main driver. The KRE US regional bank index is down 1.9%.

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