Bitcoin price rallied above $95,000 on Monday and is hovering at its highest level since February 24 as the recent rally continued.
The ongoing Bitcoin (BTC) recovery has been driven by recent optimism surrounding a potential trade deal between the United States and China.
Bitcoin and other altcoins also jumped after Trump hinted that he was not going to fire Jerome Powell, the Federal Reserve Chairman. Trump has changed his mind on tariffs and Powell’s firing following recent turmoil in the bond market, driven by bond vigilantes.
Bitcoin now has another major catalyst that could push its price higher over the longer term: the soaring unrealized losses among U.S. banks.
The recent bank earnings season revealed that U.S. banks are holding over $482 billion in unrealized losses. These unrealized losses stem from longer-dated Treasury bonds that banks purchased during the era of low interest rates.
Interest rates have surged from near zero during the pandemic to over 4% today. This increase has caused the value of existing fixed-income securities to drop, as their yields are now less attractive compared to newly issued bonds offering higher yields.
A good example of this is a ten-year government bond issued in 2020, when yields were near zero. Today, similar bonds yield between 4% and 5%.
Some of the banks most affected by unrealized losses are Bank of America, Charles Schwab, JPMorgan Chase, and Wells Fargo.
The challenge for banks is that they cannot easily sell these bonds without realizing large losses, which could impact their stock prices. At the same time, the Federal Reserve may find it difficult to cut interest rates, as Trump has demanded, since doing so could lead to higher inflation.
The risk, is that one or more banks, will end up like First Republic Bank, which collapsed in 2023 because of its high unrealized losses.
Analysts note that Bitcoin may benefit if these banks may benefit as these risks rise because it is becoming a safe-haven asset. One analyst wrote that:
“This massively reinforces the structural case for Bitcoin. Because Bitcoin isn’t just an “inflation hedge.” It’s becoming the collateral of last resort as trust in traditional collateral evaporates.”
Bitcoin price technical analysis
The 3-day chart shows that the BTC price has bounced back over the past few days. It recently crossed the crucial resistance level at $88,666, the neckline of the double-bottom pattern that formed earlier this month.
Bitcoin remains above the key resistance at $73,805, which marks the upper side of the cup and handle pattern. It has also moved above the 50-day and 100-day Exponential Moving Averages, signaling that bulls remain in control.
Therefore, the most likely scenario is for the coin to rise toward the important resistance at $100,000. After that, Bitcoin could soar to its all-time high of $109,300, followed by the cup and handle target of $122,000.
