Dizzying rally stalls

Total global cryptocurrency market capitalization fell 1.2% to $1.66 trillion in the past 24 hours as of 8:25 a.m. (EST).

The past day has been a banged gong echo for financial industry players wrapping their heads around crypto's bewildering autumnal spring. Big Wall Street banks are hurling cinder blocks while also taking concrete steps to get in on the action. Some lawmakers are playing up the worst elements of decentralized money while others are playing for time while U.S. regulators privately groom the managers who could be crypto kings.

FinTech darling Robinhood, meanwhile, has just announced the launch of crypto trading services in Europe.

"Several major U.S. crypto firms are turning to the European Union after facing a tough time from regulators stateside," CNBC said.

The dizzying week-long leg-up continues to be assessed. With Bitcoin hitting $44K, market participants have fixated on one central debate: Retracement or a trip to $50K?

Since Dec. 1, the total value of crypto increased by $180 billion, or 12%, led by BTC, which has attracted heightened interest from a widening tent of traders, many of them going long via futures contracts and options on futures.

"Signals in the derivatives market look optimistic," AMBCrypto said early Thursday.

BTC’s "funding rate" is high. That's a reference to traders shelling out periodic payments to maintain long bets via perpetual futures. Healthy funding rates were in place three weeks ago, with BTC near $35K, suggesting that then, similar to now, speculators in open-ended futures positions were more than happy to pay as much as 0.5% in fees (owing to adjustments based on rising prices in spot markets, sometimes as often as a few times per day) all of which points to active buying at a higher BTC price on the hunch it would go higher.

Bullish buying sentiment in the levered-up derivatives market is also underscored by the Taker Buy Sell Ratio (TBSR), a closely watched metric in the realm of perpetual swaps. Simply summarized, positions get booked and some liquidity-provisioning entity takes on the other side of that trade. The TBSR provides insight into how, among market takers, buying volume stacks up versus selling. Suffice to say, per AMBCrypto, the TBSR is in the green.

The spot price of Bitcoin fell 1.7% to about $43,300. This happened over the past 24 hours, as of 8:35 a.m. (EST), according to CoinGecko.

Daily technical charts do not paint as optimistic a picture as do those aforementioned futures market indicators.

For example, BTC’s Relative Strength Index (RSI) was in the overbought zone. Traders who watch the RSI will be inclined to brace for an increase in selling pressure.

BTC began 2023 very much under siege, cowering sub-$17K. But BTC would be deemed as oversold and it ultimately tasted $30K again, first in April and again in June. As of mid-September, BTC was trading at what is now a three-month low of roughly $25,150. Then, as if summoned by animal spirits, digital money’s granddad packed a grip and lit off for the hills. Some traders were caught flat-footed by BTC's extended upswing (+75% between Sept. 11 and today) with some heavy licks put upon crypto bears betting against stocks like MicroStrategy directly linked to BTC's fortunes.

In all, over the past year, short sellers of crypto-related stocks, including miners and exchanges, have hemorrhaged some $6 billion (Bloomberg).

Global regulators, bound by shared "Basel" accords, have been trying for 15 years to get banks to keep ever-larger cash cushions in the event of a worst-case scenario i.e. a run on the bank.

The singularly most memorable cinematic bank run happens in the holiday classic "It's A Wonderful Life." Director Frank Capra depicts fearful, harried residents of fictional Bedford Falls, N.Y., as they crowd into the little office of the Bailey Bros. Building & Loan office to withdraw deposits (ruining the honeymoon plans for George Bailey and his new bride, Mary).

These days, accounts can be closed out electronically, nearly instantaneously, as Santa Clara, Calif.-based Silicon Valley Bank found out this past March when tens of billions of dollars in deposits flew out the door after the bank announced $1.8 billion in bond trading losses, crashing the SVB stock.

By month's end, First Citizens Bank had acquired what was left of the failed bank's deposits and loans. Prior to that, in a fleeting, desperate window right before the run started to escalate, SVB tried to desperately raise $2 billion by selling common and preferred stock. But it was too late.

Yesterday, the chieftains of eight of the nation's largest banks went to Capitol Hill to push back against a proposal from U.S. financial regulators to raise bank capital requirements. Jamie Dimon, CEO of JPMorgan, told the Senate’s banking committee there is "zero evidence that large U.S. banks are undercapitalized today."

The proposed Basel III Endgame rule, if enacted, would, according to Dimon, "unjustifiably and unnecessarily increase capital requirements by 20-25%," a harmful slam of the breaks on the deployment of capital.

The leader of the biggest U.S. bank also used his airtime to suggest crypto should be banned, and that it's only use case was as a tool for criminals. "If I was the government, I'd close it down," Dimon said.

Crypto proponents on X pointed out the hypocrisy, highlighting JPMorgan having paid $39.3 billion in fines across 272 violations since 2000 (Cointelegraph).

A decade ago, the bank paid a $13 billion fine for fraudulently misleading investors over toxic mortgage deals.

Despite its CEO’s deeply held disdain for digital assets, JPMorgan recently launched its own token, JPM Coin, running on a private version of Ethereum on behalf of its institutional client base.