Bitcoin has surged past $95,000, spurred by optimism over a U.S.-China trade deal and supportive comments about the Federal Reserve. U.S. banks face over $482 billion in unrealized losses from Treasury bonds bought when interest rates were low. Analysts suggest Bitcoin could be viewed increasingly as a safe-haven asset as banks struggle, potentially pushing its price higher. Key technical levels also indicate further possible gains for Bitcoin.
Bitcoin’s recent performance has been noteworthy, with prices soaring past $95,000 for the first time since late February. This surge can be linked to optimism around a potential trade deal between the U.S. and China. In addition, comments from former President Trump signalling he won’t dismiss Federal Reserve Chairman Jerome Powell further encouraged market enthusiasm. Trump’s change of stance on tariffs and Powell’s leadership comes amidst troubling times in the bond market, largely fuelled by what’s being termed “bond vigilantes.”
Another factor likely affecting Bitcoin’s trajectory is the staggering $482 billion in unrealized losses currently impacting U.S. banks. This situation primarily arises from long-term Treasury bonds acquired during an era of extraordinarily low interest rates. With interest rates now exceeding 4%, the appeal of older securities has diminished, drastically reducing their value. For instance, a decade-old government bond that was yielding near zero is now competing against new bonds offering rates upward of 4% to 5%.
Prominent banks like Bank of America, Charles Schwab, JPMorgan Chase, and Wells Fargo have been hit particularly hard by these unrealized losses. The underlying issue is that unloading these bonds could trigger enormous losses, consequently affecting their stock prices. Compounding this dilemma is the Federal Reserve’s likely reluctance to lower interest rates, an action that former President Trump has pushed for, given that such a move could exacerbate inflation concerns.
The risk here is palpable, where some banks might mirror the fate of First Republic Bank, which failed in 2023 due to substantial unrealized losses. Some analysts speculate that Bitcoin could emerge as a safe-haven asset amid increasing risks to the banking sector, indicating Bitcoin’s strengthening role. One analyst expressed that this situation bolsters the case for Bitcoin, suggesting it transcends being just an inflation hedge, becoming a “collateral of last resort” as faith in traditional assets wanes.
From a technical standpoint, Bitcoin’s recent chart indicates a positive trajectory. Having recently breached the pivotal resistance level of $88,666 – the neckline of a double-bottom formation – it remains above another significant level at $73,805, which represents the upper segment of a cup-and-handle pattern. Additionally, Bitcoin has surpassed both the 50-day and 100-day Exponential Moving Averages, which points to ongoing bullish momentum. Market expectations suggest that Bitcoin may aim for the critical resistance of $100,000 and potentially push toward its all-time peak of $109,300, with a longer-term target of $122,000 if the cup-and-handle pattern plays out successfully.
