Suspension of customer withdrawal is a positive signal or negative for crypto markets?
In the past weeks, we have had news about different lending and other financial crypto services that suspect withdrawal action for their clients. Celsius Network, Babel Finance, and Three Arrows Capital are the latest service providers that have already suspected the withdrawal.
What means "suspension of customer withdrawal"? It means the clients, for a specific time or until further notice, cannot withdraw their liquidity from this financial institution; however, they will get all other benefits. This is not such a big and bad problem. Many banks also do that to prevent other more significant and critical problems. Cash-out means less interest in that specific financial service or instrument; it will add liquidity to the market. At the same time, it creates a double and unreasonable pressure on the banking systems, which in worse conditions led by emotional and out of fear withdrawal demand can bankrupt the financial systems and cause a more significant crisis, so as a measured and calculated precautionary, it can be even positive. We know that during a pandemic, central banks asked the financial institutions not to pay the dividends to save more cash to replace the bad loans to avoid bankruptcy or any other credit hit, which had a positive reaction on the markets in a bit longer timeframes.
From the technical point of view, and as you can see in the below H1 figure, the price is back above 20-HMA after falling sharply under $1,000. However, since market volume is way less than usual market standards, bulls do not have enough power, for now, to go further. 20-DMA and above 1,684 USD are the strong resistance that needs to be breathed before any long-term bullish trend.
