63 US banks on the brink of insolvency: Why Bitcoin's next target is $100K

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Bitcoin (BTC) could be on track to the psychological $100,000 mark as the “digital gold” narrative gains more prominence as another banking crisis looms in the United States. 

At least 63 U.S. banks are on the brink of insolvency

At least 63 U.S. banks were on the brink of insolvency in the first quarter of 2024, up from 52 banks on the “Problem Bank List” during the third quarter of 2023, according to the Federal Deposit Insurance Corporation’s (FDIC) quarterly report published on May 29.

Moreover, the banks are collectively sitting on $517 billion worth of unrealized losses, up $39 billion from the previous quarter, which marks the ninth consecutive month of “unusually high unrealized losses,” according to FDIC’s report, that wrote:

“Higher unrealized losses on residential mortgage-backed securities, resulting from higher mortgage rates in the first quarter, drove the overall increase. This is the ninth straight quarter of unusually high unrealized losses since the Federal Reserve began to raise interest rates in the first quarter of 2022.”

The health of the U.S. banking system has been a growing concern since March 2023 after the sudden collapse of Silicon Valley Bank (SVB) and the voluntary liquidation of Silvergate Bank. Signature Bank was also forced to close operations by New York regulators on March 12, two days after Silvergate Bank’s liquidation.

In response to the collapses, the Federal Reserve created the Bank Term Funding Program (BTFP) — offering banking loans of up to a year in return for them posting “qualifying assets” as collateral.

This emergency measure was what started the Bitcoin bull run in 2023, according to BitMEX co-founder and former CEO Arthur Hayes.

Hayes argued that this led investors to seek fixed-supply assets such as Bitcoin, during a Sep. 5 keynote speech at Korea Blockchain Week:

“Me and the rest of the market rightly saw through this as basically them admitting that they caused this problem — the structure of the banking system — and this is one of the ways you can fix it, which is: print more money.”

Bitcoin then climbed 26% from $21,900 to $28,054 during the week of March 13, 2023.

BTC/USDT, 1-week chart. Source: TradingView

What’s more, the price of BTC rose over 148% since the beginning of the banking crisis in March 2023, to trade at around $70,000 today. 

Related: PEPE whale up nearly $5M on investment within a month

The FDIC’s report has further validated the price action model of Jamie Coutts, chief crypto analyst at Realvision, who expected Bitcoin to find solid support above the $63,000 mark before further upward momentum.

Coutts wrote in a June 4 X post:

“After some nice coiling pricing action since March, my boring Bitcoin Trend model triggers. DXY down, Yields and Corp Spreads are lower. Can you smell that, son? That’s the smell of central bank liquidity in the air…”

Bitcoin price model. Source: Jamie Coutts

BTC breakout targets $100K

On the daily chart, Bitcoin price has continually printed higher lows since the beginning of May. If this chart pattern continues, Bitcoin price could break out to new all-time highs in the next few weeks, based on the chart below.

BTC/USDT, 1-day chart. Source: Tradingview

Based on historical chart patterns, Bitcoin price could be gearing up to a breakout to the $100,000 mark. For instance, crypto analyst Trader Tardigrade, wrote in a June 5 X post:

“I’m not surprised that Bitcoin has broken out the recent Bull Pennant after the Breakout of Bull Flag. Both Bull Pennant and Bull Flag are promising chart patterns. The next surge could reach over $100k.”

Bitcoin bull flag chart formation. Source: Trader Tardigrade

Bitcoin ETF inflows are back

Inflows from the United States 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.

Related: Bitcoin ETFs worldwide in focus as BTC price passes $71K

Institutional inflows from ETFs were a significant part of the current Bitcoin rally to new all-time highs. By Feb. 15, Bitcoin ETFs accounted for about 75% of new investment in the world’s largest cryptocurrency as it surpassed the $50,000 mark.

However, Bitcoin faces significant resistance at the $72,000 mark. A break above the $72,000 mark would liquidate over $922 million worth of cumulative leveraged short positions, according to Coinglass data.

Bitcoin exchange liquidaiton map. Source: Coinglass

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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