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Bitcoin, the world’s largest cryptocurrency by market capitalization, fell 6.57% in the week from Feb. 24 to March 3, trading at US$22,362 at 8:30 p.m. on Friday in Hong Kong. Ether slid 5.06% in the same period to change hands at US$1,565.
“Bitcoin tested the US$22,300 mark this week, the important level I highlighted during my previous analysis. This level holds strong support for both static and dynamic,” wrote Aziz Kenjaev, head of partnerships at decentralized crypto derivatives exchange GammaX, to Forkast.
“See also the rebound of Bitcoin from US$22,030 backed by a dynamic support and a lower border of the parallel channel of Jan. 18,” wrote Kenjaev, referring to the chart below.
“Buyers will try to keep BTC price above US$22,300 today and during weekends, however next week another giant red bar might fill in the Bitcoin chart,” added Kenjaev.
Colin Johnson, chief executive officer and co-founder of Freeport, a platform bringing fine art investment on-chain, expects Bitcoin’s crab walk to continue.
“I wouldn’t expect a pumping BTC price in the near term – even with the upcoming Yuga Labs launch. As has been the trend, we can expect to see BTC continue its crab walk between US$22,000-24,000 until the uncertainty surrounding macro elements begins to clear,” wrote Johnson.
“The markets are likely to feel just like March weather – uninviting and finicky. We appear to be squarely in the doldrums with very little on the horizon indicating a long-term recovery of the stock market. Crypto will follow suit, unless a significant change in the perception of crypto assets as hedges against inflation begins to take hold amongst large players, which remains a possibility,” added Johnson.
Jonas Betz, a Germany-based crypto analyst, told Forkast that Mt. Gox exchange’s upcoming bankruptcy repayments decision could contribute to Bitcoin’s crab walk.
“Due to fears of a Bitcoin dump because of the Mt. Gox bankruptcy redemptions as well as a tense macroeconomic situation, I expect Bitcoin to continue its sideways trend in the coming week. Though pessimism among market participants is increasing, a break below US$20,000 is unlikely, as Bitcoin has shown only little reaction to bad news in recent weeks. I expect the bitcoin price to continue its sideways trend in the range between US$21,000-25,000,” wrote Betz.
The global crypto market cap stood at US$1.03 trillion on Friday at 8:30 p.m. in Hong Kong, falling 5.5% from US$1.09 trillion a week ago, according to CoinMarketCap data. Bitcoin’s US$431 billion market cap represented 42.1% of the market, while Ether’s US$191 billion accounted for 18.7%.
Over 69% of Bitcoin supply was in profit on March 2, according to on-chain data provider CryptoQuant, up from 49% on Jan. 1. The higher this percentage, the more Bitcoin holders are in profit, increasing the probability of investors selling to take profit.
Investment management giant Morgan Stanley warned on Tuesday that the current stock market rally is a “bull trap,” and that “March is a high-risk month for the bear market to resume.”
Evgeny Goncharov, director and blockchain advisor at crypto consulting firm BDC Consulting, said that an incoming bull trap might be possible.
“The bull trap is real. Chinese money supply (US$1.7 million) in the last year influenced investing activities at the beginning of this year. It’s a new narrative impacting the crypto market too. But Chinese investors copy the behavior of western investors. That’s why we consider this factor reinforcement of the traditional markets’ trends and could be switched to different sides,” wrote Goncharov.
Biggest gainers: MKR & SSV
MakerDAO’s governance token was this week’s biggest gainer among the top 100 coins by market capitalization listed on CoinMarketCap. The Mkr token rose 25.82% on the weekly chart, to trade at US$930.16 at 8:30 p.m. in Hong Kong. Maker is the largest crypto lending protocol in the decentralized finance space.
The token started picking up on March 1, following MakerDAO’s proposal to enable the use of its governance token as collateral for borrowing the DAI stablecoin.
SSV.Network’s Ssv token was the second biggest gainer, rising 14.72% to change hands at US$44.37. SSV.Network is a project that builds distributed validator infrastructure and decentralized Ether staking products, which gained significant attention at the ETHDenver Hackathon.
See related article: Bitcoin Punks exceed 1,145 ETH in daily trading volume as Bitcoin Ordinals gain traction
Next week?
“Beware the ideas of March. Bitcoin is likely to end the month around or possibly just below US$21,000. Below US$20,000 means a possible re-testing of the US$16,000-17,000 floor. Above US$25,000 is possible only on breakout macroeconomic news, or a significant sentiment shift against the US Dollar because of runaway inflation,” wrote Freeport’s Johnson.
“Confidence reports on inflation, interest rates, the war in Ukraine, China, and possibly the outcome of the student debt relief decision in the Supreme court,” will be the main factors driving markets, according to Johnson. “Relief could drive the perception that young Americans will push their newly found ‘cash’ into the crypto ecosystem,” he added.
GammaX’s Kenjaev warned of more potential volatility next week, due to the upcoming testimony of U.S. Federal Reserve Chair Jerome Powell.
“Bitcoin’s price is also driven by the gains and losses of its major trading counterpart – the U.S. Dollar… We are expecting high volatility during the testament of Fed Chairman Jerome Powell Tuesday and Wednesday. And for the rest of the week we are expecting a slight roller coaster since the important data on job openings, NFP (nonfarm payroll report) and unemployment will be released,” wrote Kenjaev, adding that any developments regarding Paxos and Kraken will be significant.
“I am expecting a retest of US$22,800-22,900 by Monday and another drop to US$21,450 next week. The key level to watch is US$22,300. If there is a daily close below this level, then US$21,450 is the next important support to watch. Although I still stand for a drop to US$19,000, this level to me would be a significant booster level for the next major uptrend,” wrote Kenjaev.
Alex Reinhardt, the founder of PLC Ultima, a firm building crypto infrastructure for mass adoption, said that the crypto market is mainly driven by the U.S. economy and growing consumer prices.
“So far, data on the state of the American economy and the growth of consumer prices in the U. S. have a more significant impact on the crypto market and the price of Bitcoin. The PCE index published last week turned out to be worse than expected, and this negative effect immediately affected the crypto market. The risks that the Fed will decide to raise the key rate by 50 basis points instead of 25, as previously expected, have grown after the publication of the household consumption index,” wrote Reinhardt, adding that “Bitcoin Ordinals definitely cannot compare with the expected effect of the FOMC press conference scheduled for March 22.”
Betz the analyst expects more bearish momentum in March. “I can see Bitcoin ending March at US$22,000. The reason for my bearish price target is that inflation has picked up and it is likely that the Fed funds rate will be increased after the FOMC meeting on March 21-22. An important price level to watch is the psychological levels of US$20,000 and US$25,000. A breach of either of these levels will lead to a major price move,” wrote Betz.
See related article: Industry reacts: US cracks down on crypto, India calls for regulatory collaboration
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