12.05.202601:08 Forex Analysis & Reviews: Bitcoin Has Crossed Paths with Banks

Bitcoin takes two steps forward and one step backward. The cryptocurrency is sensitive to changes in global risk appetite and to events in the Middle East and the US. Congress is considering a clarity bill that will lay the regulatory foundation for the circulation of digital assets. Significant disagreements between bank representatives and crypto enthusiasts are complicating this process, causing BTC/USD to stall.

The American Bankers Association and the Consumer Bankers Association have proposed allowing customers of crypto exchanges and companies to earn rewards on stablecoin accounts. These rewards would only be available to holders who are active users and conduct multiple transactions. Coinbase called this progress, as previously, bank representatives categorically refused to make concessions, fearing loss of their own business.

Dynamics of American Employment

Bitcoin reacted positively to the April rise in US non-farm employment of 115,000. Stock indices reached new record highs amid discussions about a "Goldilocks" scenario. The American economy continues to expand, and the Federal Reserve indicates in its accompanying statements and minutes that the next step will be to lower the federal funds rate.

However, the White House deemed Tehran's proposals for moving uranium stocks to a third country unacceptable. Moreover, there was no mention of dismantling nuclear programs in the documents. Furthermore, the Iranian government media claimed that compensation for the damages caused by US and Israeli bombings of the country was necessary.

Dynamics of American Inflation

It is clear that the conflict in the Middle East is far from over. Meanwhile, high oil prices will continue to drive American inflation and ultimately force the Federal Reserve to consider tightening monetary policy. This is good news for the dollar but bad news for BTC/USD.

Can it get any worse? Companies in the digital asset sector are reporting disappointing results for the first quarter. Following more than $12 billion in losses for Michael Saylor's Strategy, Coinbase also provided little joy. The crypto exchange's revenue for January-March fell 31% to $1.4 billion, and it posted a loss of $394 million, or $1.47 per share.

However, it should be understood that there was a significant drop in BTC/USD during the first quarter. The recovery of Bitcoin prices in April-May will likely improve the financial metrics for both crypto exchanges and crypto treasuries. They are seriously hoping for better outcomes.

Technically, on the daily chart, BTC/USD is forming a 1-2-3 reversal pattern. For its activation, prices need to fall below support levels at $80,650 and $79,150. This would trigger sell signals. Conversely, a failed test of these levels would allow for a return to buying.