Bitcoin Surges Above $28,000 Amid Banking Crisis; Major BTC Holdings Nearing Break-Even

Bitcoin’s impressive growth is helping to recover losses for funds that have invested in the world’s largest cryptocurrency.

Bitcoin Surges Above $28,000 Amid Banking Crisis; Major BTC Holdings Nearing Break-Even

Bitcoin Continues to Climb Amid US-Europe Banking Crisis

As reported by Coin68, Bitcoin (BTC) surpassed $28,000 on the evening of March 19 for the first time since early June 2022, reaching a temporary peak of $28,390.

Not stopping there, the leading cryptocurrency ended the past week with a remarkable 27.17% gain—the highest weekly increase since February 2018.

The BTC Dominance Index (BTC.D) also surpassed 46%, the highest level since mid-last year, indicating that the current upward trend is driven primarily by Bitcoin itself, while other altcoins lag behind.

The impressive rise of BTC is driven by macroeconomic instability in the US and global financial markets. In mid-March, three US banks—Silvergate Bank, Silicon Valley Bank, and Signature Bank—collapsed rapidly, all of which had crypto-focused clients. Silicon Valley Bank’s collapse was the second-largest in US history, with assets of $209 billion.

In response to the crisis, the Biden administration requested intervention from the Treasury Department and the Federal Reserve (Fed) to ensure that depositors at Silicon Valley Bank and Signature Bank could withdraw their funds without losses. In return, the Fed injected $300 billion into the US financial system over the past week. This amount is half of the total liquidity the Fed had withdrawn during its quantitative tightening and rate hikes in 2022, raising speculation that USD inflation might soon return.

Reports indicate that up to 186 banks in the US are at risk of collapse similar to Silicon Valley Bank.

Additionally, last week, it was reported that Credit Suisse, Switzerland’s second-largest banking group, was facing difficulties. As of the end of 2021, Credit Suisse had assets of over $829 billion—four times the size of Silicon Valley Bank.

Credit Suisse Group announces it has entered into a merger agreement with UBS. All details available here: Credit Suisse
— Credit Suisse (@CreditSuisse) March 19, 2023

After struggling to find a solution, Swiss authorities persuaded UBS, the largest bank in Switzerland, to acquire Credit Suisse for $3.23 billion, even amending laws to allow UBS to complete the deal without a shareholder vote.

As of the early hours of March 20, the Fed and major central banks around the world, including the ECB, UK, Switzerland, Canada, and Japan, have announced agreements to increase USD liquidity in the market. Starting March 20, they will handle USD transactions on a daily basis rather than weekly. The central banks affirmed that this change is necessary to stabilize the current liquidity shortage.

However, observers note that this is another USD liquidity injection amid the banking crisis spreading from the US to Europe, further fueling Bitcoin’s rise.

BTC/USDT 4-Hour Chart on Binance as of 09:35 AM, March 20, 2023

On March 23, the Fed will announce its latest interest rate adjustment. Given the current financial instability, the question remains whether the Federal Reserve will continue its rate hikes to combat inflation or pause to address the banking crisis.

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Bitcoin’s price is expected to fluctuate ahead of this crucial Fed decision.

Major Bitcoin Funds Approaching Break-Even

Bitcoin’s robust 61.4% recovery from the start of 2023 is helping major investors who bought in during 2020-2022 get closer to recovering their losses.

Specifically, MicroStrategy, one of the largest Bitcoin holders with a portfolio of 132,500 BTC—valued at $3.69 billion—has an average purchase price of $30,137. This means MicroStrategy is now down only about 9%, a significant improvement from the more than 45% loss at the end of December 2022. MicroStrategy reported a $197 million loss in Q4 2022 due to Bitcoin but remains committed to holding.

MicroStrategy’s Bitcoin Purchase History. Source: Saylor Tracker

Similarly, Tesla, the electric vehicle company led by billionaire Elon Musk, with a Bitcoin DCA (dollar-cost averaging) price between $30,000 and $32,500, is in a strong position to break even if BTC continues to rise. After investing $1.5 billion in BTC in February 2021, Tesla sold 75% of its holdings in mid-2022, realizing $936 million. Tesla’s net loss due to BTC over the past year was $140 million.

Meanwhile, El Salvador, which purchased Bitcoin at an average price of nearly $42,700 per BTC, is still down about 35% on its investment. President Nayib Bukele announced in November 2022 that the country would buy one BTC per day, but no additional BTC purchases have been confirmed since then.

El Salvador’s Bitcoin Purchase History. Source: Saylor Tracker