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| Midsize US Banks Request Fed to Insure Deposits for Two Years, Bitcoin Price Shows Signs of Exhaustion |
Bitcoin price may experience a breather soon, as mid-sized US banks request the Federal Reserve to insure deposits for two years. The recent rally in BTC has caused the second leg of the uptrend to begin, pushing it to nine-month highs. However, Bitcoin seems to be developing a divergence on the three-day chart, which could be an opportunity to accumulate or a sell signal for bears.
A coalition of mid-sized banks has requested the federal authorities to extend its support amid the falling banking system. The banks reason that if the Fed insures deposits for two years, it would restore investor confidence and prevent a further run on the banks.
Bitcoin price triggered its first run-up in January as it inflated 41% in the first three weeks. This move was followed by a power struggle between the bulls and bears, which led to a sideways movement and a deep pullback into the inefficiency. Bitcoin price has scaled new monthly highs, but investors should note that the successive higher highs created since mid-January do not align with the Relative Strength Index (RSI) and Awesome Oscillator (AO) momentum indicators, which denote a declining strength from the buy side.
While Bitcoin price action has scaled new monthly highs, investors should note that the successive higher highs created since mid-January do not align with the Relative Strength Index (RSI) and Awesome Oscillator (AO) momentum indicators which denote a declining strength from the buy side. This non-conformity reveals the development of a bearish divergence, which results in either a small pullback or a deep correction.
Considering that Bitcoin price depegged from the negative correlation with the US Dollar and rallied amidst the Banking Crisis of 2023 reveals the nature of this uptrend. Currently, BTC is reflecting the uncorrelated asset narrative. A capital inflow into Bitcoin could be the main reason for this rally. Hence, the bearish divergence could be a buying opportunity, provided BTC holds above the $21,405 support level.
However, a decisive flip of the $21,405 support level in a three-day chart would invalidate the bullish thesis for BTC. Such a development would trigger a deep correction for Bitcoin price that rebalances the buy-side imbalance. Sellers could take this pullback to the next level and drive Bitcoin price lower to sweep the sell-side liquidity below equal lows at $15,462.
Investors need to be confident in their approach and decide if they want to sell or accumulate more. Invalidation of the ongoing bull rally will occur on a decisive flip of the $21,405 support level.
