Bitcoin Regains $28K Amid Mildly Encouraging Tech Earnings, Liquidation of Short Positions

Hear Alex Thorn share his take on “Bitcoin and Inflation: It’s Complicated” at Consensus 2023.

Bitcoin (BTC) climbed over $28,000 as investors seemed to respond to mildly encouraging first-quarter earnings from tech giants Google’s parent Alphabet and Microsoft and the liquidation of a number of bitcoin short positions.

The largest cryptocurrency by market capitalization was recently trading over $28,250, up 2.8% in the past 24 hours. BTC had traded sideways most of Tuesday before its surge shortly about the time U.S. equities markets closed.

BTC’s late surge came as Google parent Alphabet and Microsoft both slightly surpassed analysts’ expectations and data from analytics firm Coinglass showed that some $11.3 million of BTC short positions had been liquidated since 4 p.m. ET. These types of short squeezes have historically tended to accelerate price jumps.

Ether (ETH), the second-largest cryptocurrency by market value, followed a similar pattern and rose 1.8% to change hands at around $1,869. ETH slid as low as $1,804 on Tuesday morning, according to CoinDesk data.

Major equity indexes closed in the red Tuesday afternoon a day after embattled First Republic Bank (FRC) said in its quarterly results that it had lost $100 billion in deposits, renewing anxiety about regional banks. Last month, Silicon Valley and Signature banks both imploded. On Tuesday, First Republic’s shares plummeted almost 50%.

The S&P 500 and the tech-heavy Nasdaq Composite closed down 1.5% and 1.9%, while the Dow Jones Industrial Average (DJIA) was down 1% for the day.

In bond markets, the yield on the two-year Treasury note sank 19 basis points to 3.94%, while the 10-year Treasury yield dropped roughly 11 basis points to 3.40%.

“This deep into earnings season, it seems the outlook isn’t too bad and that should mean the [Federal Reserve] can stay on their tightening course with the risks of a June hike still remaining on the table,” Edward Moya, senior market analyst at foreign exchange market maker Oanda, wrote in a Tuesday note.

“After this round of earnings and the latest consumer confidence report, the one thing that everyone can agree upon is that personal consumption is going to be a lot weaker going forward,” Moya added.

In an email to CoinDesk, Stefan Rust, CEO of data aggregator Truflation, struck an upbeat note, writing that current macroeconomic uncertainties, including the ongoing debate about monetary policy, have again underlined crypto’s potential.

“This is the time for crypto to shine against all this adversity, regulations, compliance/obedience while the fiat world is struggling with debt, bank concentration and this shift to a multipolarized world with so much mistrust against institutions and lack of guidance and leadership from politicians,” Rust wrote.

He added: “If not now, crypto will just become another technology providing rails for the existing systems they want to subject to compliance so that incumbents can maintain and manage incremental transitions, versus leapfrog into a new modern age of financial innovation without middlemen.”

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