Key Points
- The “digital gold” narrative of Bitcoin (BTC) strengthens as a banking crisis in the U.S. looms, potentially driving BTC towards $100,000.
- U.S. banks are facing insolvency, with $517 billion in unrealized losses, which could further boost Bitcoin’s appeal.
The potential for Bitcoin to reach the significant $100,000 mark is increasing as it continues to gain traction as “digital gold”. This is happening amidst the looming banking crisis in the U.S. with 63 banks on the verge of insolvency.
Increasing Bank Insolvency
The number of U.S. banks on the brink of insolvency rose to 63 in the first quarter of 2024, up from 52 in the third quarter of 2023, as per the Federal Deposit Insurance Corporation’s (FDIC) quarterly report. These banks hold $517 billion in unrealized losses, marking the ninth consecutive month of high unrealized losses.
The U.S. banking system’s health has been a concern since March 2023, following the sudden collapse of Silicon Valley Bank and the voluntary liquidation of Silvergate Bank. New York regulators also forced Signature Bank to cease operations.
Bitcoin’s Bull Run
In response to these collapses, the Federal Reserve initiated the Bank Term Funding Program (BTFP), offering banking loans in return for posting “qualifying assets” as collateral. This measure reportedly triggered the Bitcoin bull run in 2023. Bitcoin then climbed 26% from $21,900 to $28,054 during the week of March 13, 2023.
The price of Bitcoin has since risen over 148% since the banking crisis began, trading at around $70,000. Jamie Coutts, chief crypto analyst at Realvision, predicted that Bitcoin would find solid support above the $63,000 mark before gaining further momentum.
Bitcoin’s price has consistently printed higher lows since the start of May. If this pattern persists, Bitcoin’s price could break out to new all-time highs in the coming weeks. Based on historical chart patterns, Bitcoin’s price could be heading towards the $100,000 mark.
Bitcoin ETF Inflows
Inflows from U.S. spot Bitcoin exchange-traded funds (ETFs) could also contribute to Bitcoin’s upward momentum. As of June 4, U.S. Bitcoin ETFs recorded their fifteenth consecutive day of net positive inflows. These inflows were a significant part of the current Bitcoin rally to new all-time highs.
However, Bitcoin faces significant resistance at the $72,000 mark. A break above this mark could liquidate over $922 million worth of cumulative leveraged short positions.
