Market Wrap: Bitcoin Dips; Trading Range Could Result in Sharp Price Swings

Bitcoin (BTC) and other cryptocurrencies traded lower on Monday alongside stocks. Analysts expect bitcoin’s trading range between $28K and $69K could result in sharp price swings, eventually giving way to a recovery within two or three months.Read MoreFeedzy

Bitcoin (BTC) remained below $40,000 on Monday as selling pressure intensified. Equities also traded lower amid Russia’s increasing attacks on Ukraine.

Talks among U.S. officials of a potential ban on Russian oil imports triggered a surge in energy prices over the past few days. Higher prices at the pump could lead to slower economic growth and lower stock prices.

In crypto markets, bitcoin was down 3% over the past 24 hours, compared to a 5% drop in ether (ETH). Trading volume remains low, and analysts noticed a loss of short-term buying pressure, which could point to limited upside in prices.

Still, sentiment and technical indicators are neutral, which typically precede a pickup in volatility.

?Bitcoin (BTC): $37933, -3.54%

?Ether (ETH): $2485, -6.04%

?S&P 500 daily close: $4201, -2.95%

?Gold: $2001 per troy ounce, +1.85%

?Ten-year Treasury yield daily close: 1.75%

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.

Bitcoin’s year-long trading range between $28,000 and $69,000 has been eventful. A mix of economic, regulatory and geopolitical headlines triggered 20%-50% price swings, which left some buyers on the sidelines.

Typically, price ranges benefit short-term traders who enter positions at support and resistance levels, aiming to profit when the price returns to its midpoint.

The chart below shows the most recent price range between $34,000 and $45,000. Peaks in trading volume are seen at support/resistance, indicating a high level of activity with buying or selling strength. Additionally, transaction activity on the Bitcoin blockchain confirms spikes in supply and demand at key technical levels.

For now, some analysts expect the trading range to persist over the short term.

“Crypto markets will need to see a period of stabilization in the next two or three months before a more sustainable recovery can get under way,” David Duong, head of institutional research at Coinbase (COIN), wrote in a report. The next major move in crypto could occur once investors have greater clarity on central bank policy and geopolitical events, according to Duong.

Bitcoin price range with volume (Glassnode)

Sentiment among crypto traders has been bearish throughout the recent price range.

The chart below shows the bitcoin Fear & Greed Index, which has remained in “fear” territory over the past three months, which could leave bitcoin vulnerable to volatility shocks. (The index runs from 0 to 100, with “fear” between 0 and 49 and “greed” between 50 and 100.)

“With prices trading sideways in recent weeks, a relative equilibrium has been established,” Glassnode, the crypto data firm, wrote in a blog post. “However, given the limited incoming fresh demand, this delicate balance can be disrupted by any significant degree of seller exhaustion, or conversely a re-invigoration of sellers.”

Bitcoin Fear & Greed Index (Alternative.me)

Fresh investment inflows into crypto funds tripled last week to the highest in almost three months, despite outflows from European products.

Digital-asset investment funds attracted $127 million of new money during the week through March 4, a report Monday from digital-asset manager CoinShares showed. The regional breakdown comprised $151 million of inflows in the Americas and outflows of $24 million in Europe.

Bitcoin funds saw inflows of $95 million last week, the most since early December. Meanwhile, ether funds saw minor inflows of $25 million, the most in 13 weeks.

DraftKings becomes Polygon validator after NFT marketplace clocks $44M in sales: Sports betting powerhouse DraftKings (DKNG) is partnering with digital asset startup Zero Hash to become a Polygon validator. The company announced Monday the collaboration will make DraftKings one of the Ethereum layer 2’s largest governors, following through on a plan that has been in the works since October, according to CoinDesk’s Eli Tan. Read more here.

Whale holdings in Cardano’s ADA token hit record high: Large investors, known as whales, appear to be bargain-hunting Cardano’s ADA token as the programmable blockchain’s decentralized finance (DeFi) protocols see rapid growth. The balance held by addresses with one million to 10 million coins rose to a record 12 billion ADA ($9.72 billion) last week, a 41% gain since late January, data provided by blockchain analytics firm IntoTheBlock show, according to CoinDesk’s Omkar Godbole. Read more here.

Dozens of tokens tumble as prolific developer Andre Cronje quits: Prices for dozens of tokens are plunging on the news that prolific developer Andre Cronje is quitting – including prices for many that only have tenuous links to the DeFi maven. On Sunday, frequent collaborator Anton Nell announced on Twitter he and Cronje were “closing the chapter” on developing in decentralized finance, according to CoinDesk’s Andrew Thurmen. Read more here.

Digital assets in the CoinDesk 20 ended the day lower.

There are no gainers in CoinDesk 20 today.

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.

DISCLOSURE

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