- Morgan Stanley analysts believe Bitcoin is the best beneficiary of the Feds cash injection into distressed banks.
- Bitcoin is on track to breach $30,000 price target and related macroeconomic moves can aid the growth.
Central Banks cannot sit idle and do nothing when the banking industry under them their watch is imploding. This fact holds true even for the United States Federal Reserve and the actions from these central banks are notably a boon for the price of Bitcoin (BTC) and by extension the majority of altcoins around today.
As reported by Coindesk, citing data from Morgan Stanley analysts, Bitcoin has rallied upward in recent days following the expectations of increased cash liquidity the Feds are injecting to bail out the distressed banks in the country.
Earlier this month, Wall Street saw a cataclysmic ripple effect amongst three major banks including Silvergate Bank, Signature Bank, and ultimately Silicon Valley Bank. The collapse of these three financial institutions was considered the biggest banking implosion since the great financial crisis of 2008.
As a Federal Deposit Insurance Corporation (FDIC) regulated bank, the regulator, backed by the duo of the Treasury Department and the Federal Reserve, a Federal Emergency Fund dubbed Bank Term Funding Program (BTFP) was launched to help relieve the burden on the collapsed banks per their deposit customers.
This move awashed the economy with excess cash flow which is first devalued and further makes risk assets like Bitcoin to become relatively more attractive. In all of this, Morgan Stanley analysts believe Bitcoin has benefitted overall.
“Bitcoin trading order book liquidity is at the lowest level in a year, meaning lower volumes can drive larger price moves than before,” analysts led by Sheena Shah wrote.
According to the findings from the analysts, the dominance of Binance in the industry now implies that traders from the exchange control the daily price of the asset. This is because Binance holds about an 80% dominance on the digital currency trade volume.
The Bitcoin Momentum and Surge to $30,000
Since Satoshi Nakamoto introduced Bitcoin, the digital currency has always had a very resounding price comeback, such that many observers are often dismayed by its unpredictable nature.
At the time of writing, the digital currency is down by 4.17% to $26,705.78, after rising as high as $28,803.34 over the trailing 7-day period according to data from Marketcap. It should be noted that Bitcoin has the positive fundamentals as well as the technical backing to breach the psychologically important level of $30,000.
There have been warnings that the consistent increment in the interest rate hike can further drag the economy and the banks into a tougher position that might fuel more banks filing for bankruptcy. Bitcoin wins either option the Fed chooses to trial as a dovish approach to fight inflation will also benefit Bitcoin in the mid to long term eventually.
