Market events so far this month can teach investors a lot about Bitcoins [BTC] demand characteristics, especially those related to the derivatives market. The same observations might come in handy when making informed market decisions.

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To recap, Bitcoins jump from 10 March was fueled by a surge in accumulation due to the loss of confidence in the banking sector. The higher confidence was particularly evident in the derivatives market. Both the Binance open interest and funding rates metrics bounced back strongly on 12 March to a new monthly high by 19 March.

Both metrics confirm a robust demand influx from the derivatives market. But what about the demand for leverage? Bitcoins estimated leverage ratio pivoted at around the same time as the other derivatives market. It grew slightly, which may indicate that market confidence is still not as high. However, it could also mean that those willing to use leverage were still relatively few.

Perhaps the best example of the impact of the leverage level in the market is its impact on price changes. For example, long liquidations soared to 304.54% on 22 March due to the surge in sell pressure. Moreover, shorts dropped by a noteworthy margin during the last few days.

BTC long liquidations also dropped sharply in the last 24 hours. This might be due to investors exiting their positions, especially now that Bitcoin is interacting within an ascending resistance line. We have seen the return of sell pressure above the $28,000 price level.

BTC has also been flirting with overbought conditions according to the RSI and the same applies for its MFI. This increases the chances of sell pressure pushing down the price, thus explaining why traders are exiting their positions.

The risk of more sell pressure is further exasperated by outflows from whale addresses. Addresses holding over 1,000 BTC peaked on 20 March and have trimmed their balances substantially since then. This is a sign that whales have been cashing out their short-term gains.

The above observations highlight a higher likelihood of the bears successfully pushing down Bitcoins price in the next few days. However, this will depend on whether there will be any new events that may accelerate the selloff or trigger a potential pivot. If the latter occurs, then Bitcoins next major target will be the $30,000 price range.

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Bitcoin [BTC]: Derivatives demand soars, but what are its implications - AMBCrypto News

Three banks have crashed and another is on life support, the U.S. banking system is on rocky ground, and fears of a recession are skyrocketing. But one group is thrilled about the current situation: the Bitcoin bros.

The collapse of Silicon Valley Bank this month, along with the smaller Signature and Silvergate banks, was followed by a rally in the price of Bitcoin after a painful year that wiped $2 trillion of value out of the crypto market. Largely silent since the fall of industry darling FTX, the crypto enthusiasts re-emerged on Twitter in recent weeks to boast about their investmenteven as others worried about their ability to pay the bills.

The chest-thumping started on March 10, when a massive run on the bank caused SVB to collapse. The bank was a lifeline for many in the tech industry, including small startup founders, who started to panic about not being able to pay their employees or put dinner on the table. Major national economists warned about a contagion that could level still more banks and drag down an already struggling economy.

Some Bitcoin enthusiasts, however, chose that moment to take a victory lap.

Banks failing. I wonder where I can put my money where I dont need to trust anyone? Like maybe Bitcoin? crypto entrepreneur and advocate Dan Held tweeted that day, adding a smirking emoji.

RT if you trust #Bitcoin more than banks, Bitcoin Magazine, the host of the annual Bitcoin Conference, tweeted that weekend.

A few days later, the federal government announced it would ensure deposits in the bank, making all SVB customers whole. The move saved thousands from financial ruin but sparked debate over whether yet another bank bailouteven one not funded by U.S. taxpayerswas the right call.

The Bitcoin bros just saw it as an opportunity to post.

#Bitcoin will never need a #Bailout, tweeted Michael Saylor. He later retweeted a video clip of crypto podcaster Natalie Brunells Fox News appearance, where she declared that Bitcoin worked this weekend when banks didn't, and that the U.S. dollar is dying by a thousand cuts.

This is our time!! Lets go team $BTC!! Lets go $ETH!! tweeted Galaxy Digital CEO Mike Novogratz. The decentralized revolution is happening. (Novogratz famously got a tattoo of a different cryptocurrency, Luna, weeks before its value crashed to zero.)

Mike Novogratz, founder and chief executive officer of Galaxy Digital

Marco Bello/Reuters

The cheering only grew louder as the price of Bitcoin continued to rise last week. Tyler Winklevoss, the tech entrepreneur whose crypto company, Gemini, is facing charges from the Securities and Exchange Commission, predicted Friday that the price of Bitcoin could reach $30,000 by the end of the weekend.

Former Coinbase chief technology officer Balaji Srinivasan took it even farther, betting a follower on Saturday that Bitcoin would reach $1 million within 90 days. You buy 1 BTC. I will send $1M USD, he tweeted. The pseudonymous follower took the bet; he told The Daily Beast via Twitter DM the two sides were just ironing out the details with a lawyer.

Joshua White, a finance professor at Vanderbilt University, called these bold predictions nothing more than hype meant to drive up the value of Bitcoin. He noted that buying Bitcoin from a crypto exchange like Coinbase or Binance was not inherently safer than investing with banks, because those exchanges could also go bankrupt and lose customers money. Users could store their tokens in their own crypto wallets, he added, but that requires a fair amount of technical savvy.

I cant imagine the mom and pop running a wine store in Nashville that says, I don't trust this bank, let me go put this money in Bitcoin, he said.

Of the crypto fans predicting a Bitcoin boom, he added: They also argued that Bitcoin was an inflation hedge, and we did not see that.

Bitcoin did not cross $30,000 by the end of last weekend, nor did it come anywhere near its historic high of more than $65,000 in 2021. According to crypto investment group CoinShares, people took more money out of digital currencies last week than they put infor the sixth week in a row. Net outflows were more than $95 million last week alone, with Bitcoin seeing the most sell-offs.

Plus, some industry experts believe the bank failures could actually wind up hurting crypto: Silvergate and Signature were two of the only banks in the U.S. willing to work with crypto companies.

The impacts would be really big if there is no U.S. bank that will take on deposits from a crypto client, Taylor Johnson, a co-founder of crypto product company PsyFi, told Time. It would be very painful, and reduce crypto activity a ton for any U.S. person or business.

Whether Srinivasan gets his $1 million back remains to be seen.

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Bitcoin Bros Can't Stop Gloating About the Bank Crisis - The Daily Beast

March 21 (Reuters) - As crisis stalks the traditional world of stocks and bonds, bitcoin is suddenly looking like a safe haven.

The infamously volatile cryptocurrency seems positively hale and hearty, just as a banking meltdown drives markets into the arms of a recession.

Bitcoin has risen 21% this month, while a choppy S&P 500 has lost 1.4% and gold has gained 8%.

"If you were going to describe an environment where there were successive bank runs because central banks are trying to fight inflation with fast rate increases, that is pretty close to as spot-on a thesis for owning bitcoin as you've ever heard," said Stphane Ouellette, CEO at digital asset investment platform FRNT Financial (FRNT.V).

The cryptocurrency has, for now, severed its ties with stocks and bonds and tagged on to a rally in gold, fulfilling at least one part of creator Satoshi Nakamoto's dream - that bitcoin can serve as a refuge for suffering investors.

Bitcoin's 30-day correlation with the S&P 500 (.SPX) has slid to negative 0.12 over the past week, where a measure of 1 indicates the two assets are moving in lock step.

A selloff in banks has wiped out hundreds of billions of dollars in market value and forced U.S. regulators to launch emergency measures. The past couple of weeks has seen Silicon Valley Bank and crypto lender Silvergate go under, while Credit Suisse has teetered on the brink.

Let's not carried away, though. This is bitcoin.

"The bearish argument would be that these dynamics are temporary, and ultimately this rally is not going to sustain," said Ouellette.

It remains to be seen if bitcoin's bullishness will endure as attention shifts to the Federal Reserve's policy meeting this week where the U.S. central bank must walk a fine line as it fights inflation and bank stresses.

[1/2]A neon logo of cryptocurrency Bitcoin is seen at the Crypstation cafe, in downtown Buenos Aires, Argentina May 5, 2022. Picture taken May 5, 2022. REUTERS/Agustin Marcarian

Furthermore, the cryptocurrency's allure hasn't all been about safety.

The rapid price rise has forced some short-sellers to cut their bets and buy coin back. Data from Coinglass shows traders liquidated $300 million worth of crypto positions on Monday, with most of that total - $178.5 million - short positions.

Nonetheless, bitcoin is resurgent.

It now commands nearly 43% of the total crypto market, its highest share since last June, according to CoinMarketCap data, while the total cryptocurrency market's capitalization has jumped 23% to $1.1 billion since March 10.

"We're seeing a return to bitcoin's core ethos, that of a financial asset independent from the opacity and meddling of the centralized financial system," said Henry Elder, head of decentralized finance (DeFi) at digital asset investment manager Wave Digital Assets.

The mainstream bank crisis has also fueled some interest in DeFi, with the total value of tokens linked to such platforms rising to $49 billion from $43 billion over the past week, according to DappRadar.

Not all areas of the digital world have been immune to the banking fallout, though. The no. 2 stablecoin Circle USD or USDC lost its 1:1 peg to the dollar after disclosing its reserves were parked at the shuttered Silicon Valley Bank.

As worries spread over USDC's ability to maintain its peg, its market cap slid to $36.8 billion last Friday from $43.8 billion a week earlier, even as leading stablecoin Tether gained around $4 billion.

Market participants said some USDC withdrawals were likely reinvested in bitcoin as well, helping fuel the rally.

"It's too soon to say that bitcoin has proven the narrative that it's an alternative in a banking crisis," cautioned Ed Hindi, Chief Investment Officer at Tyr Capital in Geneva.

But he added: "The rally we are currently witnessing in bitcoin will be looked back at as the point in time where its main property as a decentralized non-sovereign asset was stress tested."

Reporting by Medha Singh and Lisa Mattackal in Bengaluru; Editing by Vidya Ranganathan and Pravin Char

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

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Cryptoverse: Bitcoin passes the bank stress test - Reuters

The recent bank failures in the U.S. have exposed the fractional reserve banking systems core limitations and strengthened the case for investing in bitcoin (BTC).

Analysis by crypto services provider Matrixport shows that American buyers are leading the safe haven bid for the cryptocurrency. Bitcoin has rallied by over 40% in the last 10 days, reaching a nine-month high above $28,000, CoinDesk data shows.

"Since the dip on March 10, Bitcoin has rallied by +44%. +31% of the rally was driven during the U.S. trading hours and an indicator that Americans are buying bitcoins with both hands," Markus Thielen, head of research and strategy, said in a note to clients, adding that the stress in the banking sector is not over.

Bitcoin is available to trade 24/7 worldwide. However, price action varies through each 24-hour cycle depending on the news flow and macroeconomic data releases.

Of late the news flow has been dominated by banking sector issues in the U.S. and the resulting repricing of interest rate expectations lower. That explains bitcoin's positive performance during U.S. trading hours.

American hours have been a major source of bullish pressure since the beginning of the year, according to Matrixport.

"Bitcoin (BTC) is up +66% year to date, and during U.S. trading hours bitcoin rallied 47% while the cryptocurrency only rallied by +16% during trading hours in Asia. Bitcoin has barely broken a sweat during European trading hours just +3%," Thielen said.

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Bitcoin's Price Rally Driven by Americans' Safe Haven Bid: Matrixport - CoinDesk