Credit Suisse

UBS’s acquisition of Credit Suisse brings some good and bad for crypto

Many in Switzerland have said that UBS’ takeover of Credit Suisse was necessary to avoid a calamitous banking crisis like that seen in 2008.

On Sunday, March 19, the 167-year history of banking giant Credit Suisse ended with a takeover by the largest Swiss bank, UBS. Under pressure from the Swiss government, UBS took over its ailing competitor for 3 billion Swiss francs ($3.25 billion) — less than half the $8 billion market value of Credit Suisse just two days before, on Friday, March 17. 

A day later, on March 20, shares in Credit Suisse plunged more than 60% in European trading, with UBS down 9%.

To cover any losses UBS may incur in the deal, the Swiss government will provide $10 billion. The Swiss central bank will also make a $108 billion bankruptcy loan available to the banks.

Swiss publication, the Neue Zürcher Zeitung, called the takeover the “biggest economic earthquake in Switzerland since the rescue of UBS in 2008 and the grounding of Swissair in 2001.” A rescue should prevent a crisis that spreads to other banks, akin to what happened 15 years ago after the bankruptcy of Lehman Brothers in the United States. The takeover of Credit Suisse was “necessary” not only for Switzerland but for the stability of the entire global financial system, argued Swiss Confederation President Alain Berset.

Billion-dollar merger over a weekend

The deal spurred mixed reactions in the Swiss political arena. The Free Democratic Party of Switzerland (FDP) praised it, stating that the takeover was necessary to avoid severe damage to Switzerland as a financial and economic center.

Criticism came from the co-president of the Social Democratic Party of Switzerland, Cédric Wermuth, who tweeted that nothing had changed since the 2008 financial crisis. “The whole financial system is sick and absurd,” he said, adding that the state must step in again and save it.

The “Occupy” movement at Paradeplatz in Zurich, where UBS and Credit Suisse branches are located next to each other. Source: Ronald Zh

Marcel Fratzscher, president of the German Institute for Economic Research, believes the takeover could lead to one giant bank, which would provoke instability across the board in the event of a notional collapse.

In an interview with Die Tageszeitung, the German economist said the current situation is nowhere near as worrying as before the global financial crisis of 2008. “Today, it is the sharp increases in interest rates by the central banks that have taken many financial institutions by surprise and have led to massive losses.”

In other words, the problem today is “not systemic interdependence between financial institutions or inadequate provisioning in terms of liquidity and capital, but unusually aggressive monetary policy.”

‘Regulatory pressure is likely to increase’

“This takeover of Credit Suisse by UBS has sent many into a deep shock,” said Olga Feldmeier, co-founder of Swiss investment platform Smart Valor, speaking to Cointelegraph. Until 2014, she was an executive director and head of sales in the wealth management business at UBS.

“It had been known for a long time that things were not going so well at the bank. But who would have thought that the bank, which was once worth $80 billion, would be the subject of a $3 billion takeover by its arch-rival UBS?” According to Feldmeier, it’s not just the 50,000 employees who are shocked. The lenders have been hit even harder, especially those with a special high-grade bond type — the so-called Additional Tier 1 Capital.

Recent: Best and worst countries for crypto taxes — plus crypto tax tips

But when asked what the alternative would be, Feldmeier agreed that without this takeover, the consequences would be catastrophic. “After all, where is it safe if one of the top 30 systemically important — and Swiss — banks go bankrupt? In a systemic bank run, neither the European Central Bank nor the Fed would be able to help.”

Mauro Casellini, board member at CCA Trustless Technologies Association and, until January 2023, CEO at Bitcoin Suisse Liechtenstein and head of Bitcoin Suisse Europe, shared a similar view.

He told Cointelegraph that it was right that the government and regulators in Switzerland acted quickly to find a solution with the least possible negative impact on the market.

“Although there had been signs for some time that things were not going smoothly at Credit Suisse, it was difficult for outsiders to see just how critical the situation was. It is too early to say whether this was the right solution, but the sheer size of this new ‘super bank’ is impressive and regulatory pressure is likely to increase,” Casellini said.

The good and the bad

The banking crisis has brought some good and some bad for crypto. Despite negative macroeconomic developments, the crypto market performed well when news broke that UBS would take over Credit Suisse. Bitcoin (BTC) won the crypto rally with a gain of 15.5% (reaching $28,671 on March 22). Ether (ETH) gained 3.9%. Driven by the BTC price rally, the share prices of listed Bitcoin mining companies have risen by as much as 120% since the beginning of the year.

According to Feldmeier, it’s a positive phenomenon for crypto exchanges, both big and small. “More trading, higher sales, some of the long missed tailwind would not hurt our industry,” said Feldmeier. “This also increases the certainty that the Bitcoin cycle keeps what it promises — namely, the next bull run around Bitcoin halving in March 2024”.

The loss from clients and investors in traditional financial institutions could positively affect the crypto market as investors turn to alternative assets, such as cryptocurrencies.

However, the Credit Suisse acquisition and the fact that the banking industry faces many different risks and challenges worldwide also has a negative side. Banks are still important partners for crypto companies. If banks are not doing well, they will be even less willing to work with crypto companies or raise fees, which will not make life easier for the crypto industry.

Recent: To be or not to be: Ethics, democracy and morality in the nascent metaverse

The recent closures of fiat on- and off-ramp banks such as Silvergate and Signature, followed by the collapse of Credit Suisse, have created “significant risks for the crypto market,” said Casellini. According to the expert, it was necessary “to address issues such as regulation, security, and transparency to build trust with investors and ensure the long-term viability of the market. Regulation will help our industry in the long run to build a successful and more decentralized alternative to the traditional financial system.”

Casellini also expects to see more challenges and risks in the future due to the changing interest rate landscape and additional requirements on banks.

“It will be interesting to see how governments and especially national banks react, and whether they will save struggling banks or let them fail.”

The impact of the Credit Suisse bank crisis on the crypto market

Cointelegraph analyst and writer Marcel Pechman explains how the Credit Suisse bank crisis will impact the crypto market.

The show Macro Markets, hosted by Marcel Pechman, which airs every Friday at 12 pm ET on the Cointelegraph Markets & Research YouTube channel, explains complex concepts in layman’s terms and focuses on the cause and effect of traditional financial events on day-to-day crypto activity.

In today’s episode, crypto analyst Pechman discusses how to analyze banks — importantly, how to avoid the erroneous market capitalization indicator, which had a $15.8-billion value for the defunct Silicon Valley Bank (SVB).

The enterprise value (EV) metric provides a much better picture of a bank’s balance sheet terms by subtracting net debt from market cap. Of course, Pechman first explains the relationship between banking valuation and cryptocurrencies, specifically Bitcoin’s (BTC) ethos.

The video explores the 2018 denial of The Narrow Bank’s application, a bank that would not leverage client deposits and would only invest in United States Treasurys. This is a fascinating tale — you should watch the whole episode on YouTube for more information.

Pechman explains why an eventual crypto pump caused by a banking industry collapse would not be sustainable, as recession risks outweigh initial enthusiasm. The video goes on to compare bond (debt) markets to gold, equities and real estate.

The episode concludes with a quick look at unrealized losses and how the debt markets could spark a massive bull run for Bitcoin and cryptocurrencies.

If you are looking for exclusive and valuable content provided by leading crypto analysts and experts, make sure to subscribe to the Cointelegraph Markets & Research YouTube channel. Join us at Macro Markets every Friday at 12:00 pm ET.

Why is Bitcoin rising amid collapsing banks? Watch The Market Report

On this week’s episode of The Market Report, Cointelegraph’s resident expert explains why Bitcoin is rising and why banks are collapsing.

This week on The Market Report, our beloved host, Joe Hall, and insightful expert, Sam Bourgi, unfortunately, could not make it, but don’t worry because Marcel Pechman is here to discuss why he thinks Bitcoin’s (BTC) price is rising amid collapsing banks.

We kick things off with this week’s first article:

UBS Group agrees to $3.25B “emergency rescue” of Credit Suisse

UBS Group agreed to buy its ailing competitor Credit Suisse for $3.25 billion on March 19 as part of an “emergency ordinance” to prevent financial market instability. To close the deal, Swiss authorities agreed to change the country’s regulations to bypass a shareholder vote and announce the deal over the weekend ahead of the market opening. Was this move actually legal? After this move, will Switzerland still have a reputation for being the securest financial market? Pechman has much to say on this matter and addresses the issue with Credit Suisse debt holders, so watch the whole video because you won’t want to miss his insights.

Investors shelter in short-term Treasurys, reducing Bitcoin’s chance of rallying to $30K

The price of Bitcoin surpassed $28,000 on March 21, but according to two derivatives metrics, traders aren’t very ecstatic after a 36% gain in eight days. Looking beyond Bitcoin’s stellar performance, there are reasons investors are not fully confident in further price upside. The recent rescue of Credit Suisse, a 167-year-old leading Swiss financial institution, proves that the current global banking crisis might not be over. Pechman explains why the price of Bitcoin might not touch $30,000 just yet.

The Market Report airs every Tuesday at 12:00 pm ET (5:00 pm UTC), so be sure to head on over to the Cointelegraph Markets & Research YouTube page and smash those Like and Subscribe buttons for all our future videos and updates.

UBS Group agrees to $3.25B ‘emergency rescue’ of Credit Suisse

Swiss authorities agreed to change the country’s regulations to bypass a shareholder vote and announce the deal over the weekend.

UBS Group has agreed to buy its ailing competitor Credit Suisse for $3.25 billion on March 19 as part of an “emergency ordinance” to prevent financial market instability. 

An earlier report from the Financial Times claimed UBS had agreed to buy Credit Suisse for over $2 billion, citing a person familiar with the matter. However, a most recent statement from UBS has revealed that the total consideration for the deal is approximately 3 billion Swiss francs, or $3.25 billion. That’s still a deep discount to Credit Suisse’s March 17 market capitalization of 7.5 billion francs, or $8 billion.

“This acquisition is attractive for UBS shareholders but, let us be clear, as far as Credit Suisse is concerned, this is an emergency rescue. We have structured a transaction which will preserve the value left in the business while limiting our downside exposure,” said UBS Chairman Colm Kelleher.

To close the deal, Swiss authorities agreed to change the country’s regulations to bypass a shareholder vote and announce the deal over the weekend, ahead of the market opening.

Also, as part of the deal, the Swiss National Bank has committed to providing over $100 billion in liquidity to UBS, according to reports. 

The discussions were initiated jointly by the Swiss Federal Department of Finance, the Swiss Financial Market Supervisory Authority (FINMA) and the Swiss National Bank, and the acquisition has their full support, UBS said in its statement.

Swiss authorities considered alternatives to Credit Suisse in case the deal with UBS failed over the weekend, including a full or partial nationalization of the bank as an emergency option.

Credit Suisse’s rescue plan would also include losses to bondholders, prompting concerns by European regulators that it would undermine investor confidence in Europe’s financial sector.

UBS and Credit Suisse have been locked in talks with regulators since March 15, after Credit Suisse’s largest shareholder, Saudi National Bank, said that it wouldn’t increase its investment in the Swiss bank due to regulations. Concerns about the bank’s ability to profit were heightened by the comments, raising fears about possible shareholder financing.

Credit Suisse was founded in 1856 to finance the expansion of Swiss railroads. It was considered the second-largest bank in the country.

Update March 20, 2:14 am UTC: Added information from the official UBS statement on the proposed acquisition.

Credit Suisse rescue plan may include nationalization, bondholder losses

A bank rescue plan for Credit Suisse may impose losses on its bondholders and even result in a full or partial nationalization of Credit Suisse Group AG.

A rescue plan for Swiss banking giant Credit Suisse may impose losses on its bondholders and even result in a full or partial nationalization of Credit Suisse Group AG, multiple reports revealed on March 19. 

Swiss authorities are considering applying losses to Credit Suisse bondholders as part of the bank’s ongoing recovery efforts, Reuters learned from two sources. European regulators are concerned that the move might undermine investor confidence in Europe’s financial sector.

Another report from Bloomberg claims that the Swiss government is analyzing a full or partial nationalization of the bank, the only available alternative if the UBS takeover is not completed. Investment bank UBS is Switzerland’s largest bank.

On March 18, the Swiss National Bank and Switzerland’s financial regulator said that Credit Suisse’s acquisition by UBS is the “only option” to prevent a “collapse in confidence” in Credit Suisse. 

The nationalization would be an emergency option due to the complexities surrounding the deal and the limited time available. Swiss authorities are working over the weekend on “emergency measures” to accelerate the deal before Asian markets open, including allowing the deal to proceed without a shareholder vote.

UBS is reportedly asking the government to shoulder around $6 billion on legal costs and potential future losses in the event of a takeover. UBS is offering $1 billion for Credit Suisse, a considerable discount under the bank’s market value on March 17 of nearly $8 billion, according to Companies Market Cap.

Market capitalization history of Credit Suisse, 2001-2023. Source: Companies Market Cap

Swiss authorities are also concerned about job losses due to the deal. According to reports, Credit Suisse was previously considering laying off 9,000 employees to save its business.

Investment company BlackRock on March 18 denied plans or interest in acquiring Credit Suisse. “BlackRock is not participating in any plans to acquire all or any part of Credit Suisse, and has no interest in doing so,” the firm said on Twitter. 

Let First Republic and Credit Suisse burn

Silicon Valley Bank and Signature Bank set off a cascade among banks that haven’t been handling their finances responsibly. Let them face the consequences.

When crypto markets took a hit after the collapse of FTX and other crypto lenders last year, some crypto critics repeated the mantra, “Let crypto burn.” Now, it’s big banks that are faltering — including Credit Suisse and First Republic — after regional banks, including Signature Bank and Silicon Valley Bank, sparked a cascade. As a result, Moody’s has downgraded the entire banking sector.

If “Let crypto burn” was a snappy way of saying that operating outside the financial system means more personal responsibility and heightened risk, fine, crypto natives understand that concept. But now, we have a chance to turn a critical lens on the traditional financial system.

With traditional banks experiencing financial pressure, it’s time to let many of them fail. Forest fires can burn away old growth to make way for new trees to sprout. The same principles apply to banking.

Politicians and crypto critics have aligned to build the narrative that crypto is the risk at the heart of the crisis. The dirty little secret is that Treasury bonds were the nuclear bomb at the epicenter of this banking crisis, and central bank interest rate policy was the plane that delivered the payload.

Related: How credible is the ‘Operation Chokepoint’ theory?

These struggling banks loaded up on long-term treasury bonds during a period of near-zero interest rates and at a time when the United States Federal Reserve continued to try to mollify banks that they would keep rates near zero for the foreseeable future.

There is an unavoidable tradeoff between low-interest rates and inflation; Fed macroeconomists know this, and yet the Fed acted with surprise as it quickly raised rates to catch up to the inflation wildfire over the last two years. A steep rise in rates made the old long-term treasuries — the ones paying very low interest — sharply decrease in value. When depositors demand their money back (with heightened speed in the era of internet banking) and all you have to sell to pay them are junk Treasuries, you have a problem.

The Federal Reserve has given Treasury bond holdings preferential treatment in its regulations and supervisory approaches (including those from which SVB was recently exempted). This puts blame on the Federal Reserve from two directions, its surprise about-face on interest rate policy and its regulatory policy favoring Treasury holdings.

There are many highly inefficient aspects of TradFi, where rotten trees are choking the growth of new sprouts. Some are a result of similar pathologies where the government uses the banking system to subsidize its own political objectives. It would be better for the economy to let them burn.

Much of the business model of taking in fiat short-term, on-demand deposits, and parking that money in illiquid long-term Treasurys (subsidizing the government) or mortgage-backed securities (where the government subsidizes unaffordable home prices) needs to burn away.

Rent-seeking brick-and-mortar facades, with most customer service outsourced overseas and who earn most of their revenue from overdraft fees, need to burn. Payment systems that bribe cardholders with “cash back” programs then use the market power their consumer bribes give them to gouge the merchant, need to burn.

Related: The Federal Reserve’s pursuit of a ‘reverse wealth effect’ is undermining crypto

Some smaller and regional banks who have failed to innovate, and for which the otherwise unobtainable bank charter has become the modern-day taxi medallion ensuring them rents from third-party custody of fiat deposits, need to burn away some of the overgrowth as well.

Crypto is a revolution in finance, intended to replace the intermediary-centric financial system with a self-sovereign approach where the individual is able to digitally custody native financial assets themselves.

This transformation will take time. Developers at decentralized finance (DeFi) protocols and layer-1 blockchains live most of their lives in the fiat economy. The federal government will only accept fiat dollars for tax payments, while banks dominate real estate mortgages.

DeFi protocols are making inroads into home mortgages, but that’s at its earliest stages. Consumer finance and tax payments are still fiat-based. And crypto developers at a minimum deserve the same treatment as anyone else participating in the fiat economy. That means they shouldn’t be discriminated against in the provision of basic checking and savings accounts.

We need some of the banking system to survive. But we don’t need all of it to survive, and the parts that burn away open opportunities for crypto-native replacements if banks don’t unfairly discriminate against crypto clients.

J.W. Verret is an associate professor at the George Mason Law School. He is a practicing crypto forensic accountant and also practices securities law at Lawrence Law LLC. He is a member of the Financial Accounting Standards Board’s Advisory Council and a former member of the SEC Investor Advisory Committee. He also leads the Crypto Freedom Lab, a think tank fighting for policy change to preserve freedom and privacy for crypto developers and users.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Bitcoin returns to $25K as Credit Suisse bailout precedes EU rate hike move

A day of important macroeconomic news in the U.S. and Europe sees BTC price action circling the all-important $25,000 zone.

Bitcoin (BTC) rebounded for a fresh challenge of $25,000 on March 16 ahead of a key interest rate decision in Europe.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Credit Suisse stock up 40% after “decisive action”

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD gaining almost $1,000 versus overnight lows of $24,229 on Bitstamp.

The pair remained buoyant as news hit that Switzerland’s central bank was due to inject $50 billion Swiss francs ($53.8 billion) into the embattled Credit Suisse, shares of which added 40% on the day.

“These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders,” CEO Ulrich Koerner stated in a press release.

While averting potential catastrophe, the move came in for criticism ahead of a day full of economic maneuvers in Europe and the United States.

“When Swiss banks need bailouts to survive it’s probably a decent time to think about buying,” trader, analyst and podcast host Scott Melker, known as “The Wolf of all Streets,” commented.

Uncertainty over European economic policy remained, with the European Central Bank (ECB) due to decide on how much interest rates should rise next.

Just like the Federal Reserve in the U.S., the ECB is caught between alleviating bank stress and keeping a lid on inflation. The day’s hike was previously due to be 50 basis points.

Twitter macro analytics account Tedtalksmacro noted that Bitcoin might already fall behind equities markets based on the previous day’s performance.

In the U.S., the topic of interest was jobless claims, with analysts hoping for an overshoot of expectations to bolster the chances of the Fed pivoting on its own rate hike program.

“We are looking for a hot Jobless reports to start plotting an uptrend in Jobless claims. Getting it would increase the probability of the FED pausing rate hikes this month,” on-chain monitoring resource Material Indicators wrote in part of the Twitter commentary.

Cointelegraph contributor Michaël van de Poppe, founder and CEO of trading firm Eight, said the jobs data constituted a “big day.”

“Last week we’ve seen the largest jump since October, would be wondering whether we’ll be seeing continuation of that rise, which might mean we’ll have higher unemployment numbers,” he added.

Analysts see encouraging Bitcoin market strength

With that, traders were biding their time to gauge the impact of macroeconomic shifts, with BTC/USD still in a narrower trading range.

Related: Bitcoin to $100K next? Analyst eyes ‘textbook perfect’ BTC price move

“Same update as I was looking at yesterday guys,” popular trader Crypto Tony wrote in his latest update on the day.

“$23,400 stop loss on my existing long position, and looking for shorts if we begin to lose the $22,600 support zone Until the sort of stuck in a sideways motion.“

BTC/USD annotated chart. Source: Crypto Tony/ Twitter

“BTC Grinding up while spot premium is increasing,” a cautiously optimistic Daan Crypto Trades noted while eyeing derivatives data.

“Funding rates already flipping below baseline or into the negative across the board. Looks healthy.“

BTC/USD derivatives data. Source: Daan Crypto Trades/ Twitter

Popular commentator Byzantine General meanwhile entertained the prospect of future BTC price dips being “very shallow.“

“Price keeps hugging upper range, perps basis already completely reset, futs basis still hovering around zero and there are lots of spot bids that don’t seem to be going anywhere,” he agreed.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Swiss National Bank says it will support Credit Suisse if necessary

Swiss regulators reaffirm the soundness of the Swiss financial system, following recent concerns about Credit Suisse.

The Swiss National Bank (SNB) and the Swiss Financial Market Supervisory Authority released a joint statement on March 15 on the stability of the Swiss banking system and Credit Suisse. The problems of “certain banks in the USA” do not pose a risk for the Swiss financial system, they wrote.

The statement was reportedly produced at the request of Credit Suisse. The regulators said Credit Suisse meets all capital and liquidity requirements, but “if necessary, the SNB will provide CS [Credit Suisse] with liquidity.” However, Credit Suisse still “meets the capital and liquidity requirements imposed on systemically important banks.” The statement acknowledges that Credit Suisse has been “affected by market reactions in recent days.”

On March 14, Credit Suisse Group CEO Ulrich Körner confirmed that the bank is conservatively positioned against interest rate risks. That day, the bank admitted “material weakness in our internal control over financial reporting” after its 2022 performance was the worst since the 2008 global financial crisis.

The SBN statement comes as Credit Suisse shares fell precipitously at the start of trading on March 15, losing up to 30%, and had been temporarily halted during a heavy sell-off. Trading was halted for several other European banks at the same time. 

Saudi National Bank Chair Ammar Al Khudairy said on March 15 that the Saudi central bank — the largest Credit Suisse shareholder, with 9.8% of its stock — would “absolutely not” provide support for Credit Suisse. 

European Central Bank officials have contacted banks they supervise to ask about their Credit Suisse exposure, and the French finance minister will call his Swiss colleague to discuss the developments at Credit Suisse. A U.S. Treasury official told the news service that it was monitoring the bank’s situation. 

Bitcoin rejects at $25K as US PPI data meets Credit Suisse meltdown

BTC price attempts to break toward the week’s highs, but a charging U.S. dollar creates some serious friction for Bitcoin bulls.

Bitcoin (BTC) kept bears sweating near $25,000 on March 15 as encouraging macroeconomic data combined with concerns over banking crisis contagion.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

PPI offers “great signs” on Fed pivot

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD recovering from a 24-hour comedown to see highs of $25,273 on Bitstamp.

The pair reacted positively to the latest United States Producer Price Index (PPI) data, which came in far lower than expected.

Prior to the release, the Binance order book showed principal bid and ask liquidity parked at $22,000 and $26,000, respectively.

“Time will tell if enough bid liquidity is there to insulate $22k from getting hit,” on-chain monitoring resource Material Indicators wrote in part of an accompanying commentary while uploading the data to Twitter.

BTC/USD order book data (Binance). Source: Material Indicators/Twitter

For Cointelegraph contributor Michaël van de Poppe, founder and CEO of trading firm Eight, signs were there for the Federal Reserve and Chair Jerome Powell to abandon interest rate hikes at next week’s decisive meeting.

“PPI comes in at 4.6%, while 5.4% was expected. Massive miss, resulting into inflation coming down. Powell to pivot?” he queried.

“Atleast 25bps seems very likely (or no hikes with the banking issues). Great signs!”

The PPI joined already buoyant Consumer Price Index data released the day prior, which accompanied nine-month highs for Bitcoin as crypto took full advantage of the unfolding U.S. banking crisis.

A day later, however, the focus was Europe as European bank stocks were halted for volatility and one in particular, Credit Suisse, hit new record lows.

Credit Suisse was down over 25% at one point before a reversal took it above the $2 mark.

“Silicon Valley Bank had about $209 billion in assets. Credit Suisse has about $578 billion in assets,” Genevieve Roch-Decter, CEO of financial insights firm Grit Capital, commented on the situation.

“This is a much bigger problem in the making.”

Dollar climbs, ignores U.S. inflation data

Crypto, meanwhile, faced headwinds from an arguably unlikely source on March 15 in the form of surging U.S. dollar strength.

Related: Bitcoin to $100K next? Analyst eyes ‘textbook perfect’ BTC price move

Despite the economic data print showing declining inflation and more favorable conditions for risk assets, the U.S. Dollar Index (DXY) hit 105 for the first time since the Silicon Valley Bank implosion on March 1

Markets commentator Tedtalksmacro pinned the blame firmly on Europe’s banking troubles.

“Banking contagion is now spreading to Europe, euro bond yields sharply lower and therefore EUR is also sharply lower,” part of a tweet read.

“The EUR makes up 58% of the DXY. So EUR down = DXY up!”

The DXY measures dollar strength against a basket of major trading partner currencies. Its performance is traditionally inversely correlated with crypto markets.

U.S. dollar index 1-hour candle chart. Source: TradingView

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

BTC price still not at ‘max pain’ — 5 things to know in Bitcoin this week

Bitcoin has plenty of obstacles to weather in the current macro storm as two-year weekly close lows remain inches away.

Bitcoin (BTC) starts a new week in a precarious place as global macro instability dictates the mood.

After sealing a weekly close just inches above $19,000, the largest cryptocurrency still lacks direction as nerves heighten over the resilience of the global financial system.

Last week proved a testing time for risk asset investors, with gloomy economic data flowing from the United States and, moreover, Europe.

The eurozone thus provides the backdrop to the latest concerns of market participants, who are watching as the financial buoyancy of major banks is called into question.

With the war in Ukraine only escalating and winter approaching, it is perhaps understandable that hardly anyone is optimistic — what could the impact be on Bitcoin and crypto?

BTC/USD remains below its prior halving cycle’s all-time high, and as comparisons to the 2018 bear market flow in, so too is talk of a new multi-year low.

Cointelegraph takes a look at five BTC price factors to watch in the coming days, with Bitcoin still firmly below $20,000.

Spot price avoids multi-year low weekly close

Despite the bearish mood, Bitcoin’s weekly close could have been worse — at just above $19,000, the largest cryptocurrency managed to add a modest $250 to last week’s closing price, data from Cointelegraph Markets Pro and TradingView shows.

BTC/USD 1-week candle chart (Bitstamp). Source: TradingView

That prior close had nonetheless been the lowest since November 2020 on weekly timeframes, and as such, traders continue to fear that the worst is yet to come.

“The bears remained in full swing last night during the Asian, while the bulls failed to give us any good rallies to work off on,” popular trader Crypto Tony wrote in part of a Twitter update on the day.

Others agreed with a summary that concluded that BTC/USD was in a “low volatility” zone, which would necessitate a breakout sooner or later. All that was left was to decide on the direction.

“Next big move is up,” Credible Crypto responded:

“Typically prior to these major moves and after capitulation we see a period of low volatility before the next big move begins.”

As Cointelegraph reported, the weekend was already tipped to provide a boost of volatility as suggested by Bollinger Bands data. This came hand in hand with rising volume, a key ingredient in sustaining a potential move.

“Weekly chart BTC shows a massive increased volume since the beginning of the third quarter + weekly bullish divergence on one of the most reliable time frames,” fellow trading account Doctor Profit concluded:

“Bitcoin price increase is just a matter of time.”

Not everyone eyed an impending comeback, however. In predictions over the weekend, meanwhile, trader Il Capo of Crypto gave the area between $14,000 and $16,000 as a longer-term target.

BTC/USD annotated chart. Source: Il Capo of Crypto/ Twitter

“If this was the real bottom… bitcoin should be trading close to 25k- 26k by now,” trading account Profit Blue argued, showing a chart with a double bottom structure potentially in the making on the 2-day chart.

Credit Suisse unnerves as dollar strength goes nowhere

Beyond crypto, attention is coalescing around the fate of major global banks, in particular Credit Suisse and Deutsche Bank.

Worries over liquidity resulted in emergency public reassurances from the CEO of the former, with executives reportedly spending the weekend calming major investors.

Bank failures are a sore spot for underwater hodlers — it was government bailouts of lenders in 2008 which originally spawned Bitcoin’s creation.

With history increasingly looking to rhyme nearly fifteen years later, the Credit Suisse saga is not going unnoticed.

“We can’t see inside CeFi firm Credit Suisse  JUST LIKE we could not see inside of CeFi firms Celsius, 3AC, etc.,” entrepreneur Mark Jeffery tweeted on the day, comparing the situation to the crypto fund meltdowns earlier this year.

For Samson Mow, CEO of Bitcoin startup JAN3, the current environment could yet give Bitcoin its time to shine in a crisis instead of staying correlated to other risk assets.

“Bitcoin price is already pushed down to the limit, well below 200 WMA,” he argued, referring to the 200-week moving average long lost as bear market support.

“We’ve had contagion from UST/3AC and leverage flushed already. BTC is massively shorted as a hedge. Even if Credit Suisse / Deutsche Bank collapse & trigger a financial crisis, can’t see us going much lower.”

Nonetheless, with instability already rampant throughout the global economy and geopolitical tensions only increasing, Bitcoin markets are voting with their feet.

The U.S. dollar index (DXY), still just three points off its latest twenty-year highs, continues to circle around for a potential rematch after limiting corrective moves in recent days.

Looking further out, macroeconomist Henrik Zeberg repeated a theory that sees DXY temporarily losing ground in a major boost for equities. This, however, would not last.

“In early 2023 DXY will once again rally with target of ~120. This will be Deflationary Bust – and Equities will crash in a larger bust than during 2007-09,” he wrote in part of a tweet:

“Largest Deflationary Bust since 1929.”

U.S. dollar index (DXY) 1-day candle chart. Source: TradingView

Miner revenue measure nears all-time low

With Bitcoin price suppression grinding on, it is less than surprising to see miners struggle to maintain profitability.

At one point in September, monthly selling from miners was in excess of 8,500 BTC, and while this number subsequently cooled, data shows that for many, the situation is precarious.

“Bitcoin miner revenue per TeraHash on the edge of all time lows,” Dylan LeClair, senior analyst at digital asset fund UTXO Management, revealed at the weekend:

“Margin squeeze.”

Bitcoin miner revenue per terahash chart. Source: Dylan LeClair/ Twitter

The scenario is an interesting one for the mining ecosystem, which currently deploys more hash rate than at almost any time in history.

Estimates from monitoring resource MiningPoolStats put the current Bitcoin network hash rate at 261 exahashes per second (EH/s), only marginally below the all-time high of 298 EH/s seen in September.

Competition among miners also remains healthy, as evidenced by difficulty adjustments. While seeing its first decrease since July last week, difficulty is set to add an estimated 3.7% in seven days’ time, taking it to new all-time highs of its own.

Nonetheless, for economist, trader and entrepreneur Alex Krueger, it may yet be premature to breathe a sigh of relief.

“Bitcoin hash rate hitting all time highs while price goes down is a recipe for disaster rather than a cause for celebration,” he wrote in a thread about the miner data last month:

“As miner profitability gets squeezed, odds of another round of miner capitulation increase in the event of a downmove. But hopium never dies.”

Bitcoin network fundamentals overview (screenshot). Source: BTC.com

GBTC “discount” hits new all-time low

Echoing the institutional exodus from BTC exposure this year, the space’s largest institutional investment vehicle has never been such a bargain.

The Grayscale Bitcoin Trust (GBTC), which in the good times traded far above the Bitcoin spot price, is now being offered at its biggest-ever discount to BTC/USD.

According to data from Coinglass, on Sep. 30, the GBTC “Premium” — now, in fact, a discount — hit -36.38%, implying a BTC price of just $11,330.

The Premium has now been negative since February 2021.

Analyzing the data, Venturefounder, a contributor to on-chain analytics platform CryptoQuant, described the GBTC drop as “absolutely wild.”

“Yet still no sign of GBTC discount bottoming or reversing,” he commented:

“Institutions are not even biting for $12K BTC (locked for 6 months).”

GBTC premium vs. asset holdings vs. BTC/USD chart. Source: Coinglass

Cointelegraph has long tracked GBTC, with owner Grayscale attempting to get legal permission to convert and launch it as a spot exchange-traded fund (ETF) — something still forbidden by U.S. regulators.

For the meantime, however, the lack of institutional appetite for BTC exposure is something of an elephant in the room.

“Objectively, I would say there isn’t much interest in $BTC from U.S. based institutional investors until $GBTC starts getting bid closer to net asset value,” LeClair wrote last week.

Charting Bitcoin’s “max pain” scenario

While it is safe to say that a fresh Bitcoin price drop would cause many a hodler to question their investment strategy, it remains to be seen whether this bear market will copy those which have gone before.

Related: Analyst on $17.6K BTC price bottom: Bitcoin ‘not there yet’

For analyst and statistician Willy Woo, creator of data resource Woobull, the next bottom could have a close relationship with hodler capitulation.

Previously in Bitcoin’s history, bear market bottoms were accompanied by at least 60% of the BTC supply being traded at a loss.

So far, the market has almost, but not quite, copied that trend, leading Woo to conclude that “max pain” may still be around the corner.

“This is one way of visualising maximum pain,” he wrote alongside one of his charts showing underwater supply:

“Past cycles bottomed when approx 60% of the coins traded below their purchase price. Will we hit this again? I don’t know. The structure of this current market this time around is very different.”

According to on-chain analytics firm Glassnode, as of Oct. 2, 9.52 million BTC was being held at a loss. Last month, the metric in BTC terms hit its highest since March 2020.

Bitcoin supply in loss chart. Source: Glassnode

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.