Bitcoin hovers at $25k amid US dollar surge and Credit Suisse meltdown

On Mar 16, 2023

Bitcoin retained its position near $25,000 on March 16 as it attempted to break toward the week’s highs, despite a surging U.S. dollar combined with banking crisis contagion.

BTC reacts to US PPI

Data from CoinMarketCap showed BTC/USD recovering from a 24-hour drop to reach a high of $25,001 on March 16.

BTC price movement in the last 24 hours | Source: CoinMarketCap

The pair responded well to the latest United States Producer Price Index (PPI) data, which was much lower than expected.

Before the release of the data, bitcoin’s principal bid and ask liquidity stood at $22,000 and $26,000, respectively.

Here’s how the #BTC order book on @binance is setup ~30 mins ahead of the PPI and Retail Sales Reports. Markets are looking for cool PPI and hot Retail Sales, but #BankRun #FUD may rule the day.
Time will tell if enough bid liquidity is there to insulate $22k from getting hit. pic.twitter.com/hTsz14fJaB
— Material Indicators (@MI_Algos) March 15, 2023

The U.S. PPI joined the Consumer Price Index (CPI) data that was released before, which saw BTC shoot to a 9-month high.

PPI comes in at 4.6%, while 5.4% was expected.
Massive miss, resulting into inflation coming down.
Powell to pivot? Atleast 25bps seems very likely (or no hikes with the banking issues).
Great signs!
— Michaël van de Poppe (@CryptoMichNL) March 15, 2023

Credit Suisse shares soared over 30% on March 16 after the bank said it would borrow up to $54 billion from the Swiss National Bank.

Bitcoin hovers at $25k amid US dollar surge and Credit Suisse meltdown - 2 — Credit Suisse share prices as of March 16 |Source: Google Finance

Dollar climbs, despite declining inflation

The surging U.S. dollar strength saw cryptocurrency prices struggle to keep up on March 16.

The U.S. Dollar Index (DXY) reached 105 for the first time since the collapse of Silicon Valley Bank on March 1, despite declining inflation and better conditions for risk assets.

DXY measures the strength of the U.S. dollar against other major currencies.

For those asking ‘why is DXY pumping?’
My take:
Banking contagion is now spreading to Europe, euro bond yields sharply lower and therefore EUR is also sharply lower.
The EUR makes up 58% of the DXY. So EUR down = DXY up!
— tedtalksmacro (@tedtalksmacro) March 15, 2023

Market commentator tedtalksmarco blamed the rise in DXY despite declining inflation on Europe’s banking troubles.