Results of the week on the crypto market: sideways correction continues

Unjustified optimism of investors was quickly replaced by disappointment and market correction. Only Terra among the top 10 cryptocurrencies continues to show steady growth.

Market Review

As we predicted last week, the accumulation of funds achieved by the whales allowed Bitcoin to overcome the first resistance level of $40,000-$41,000 and even storm the $45,000 mark in early March. However, regulatory pressure and general market uncertainty do not allow changing the current bearish trend. According to CoinMarketCap, the dynamics of the crypto market for the period February 28 – March 6 amounted to +0.06%. Bitcoin rose by 1%, while Ethereum lost 4.9% in price over the week. Altcoin Terra for the second week in a row shows the highest growth among the leading cryptocurrencies (+9.4%). According to CoinGecko on March 6, the price of bitcoin is $39,527.

Change in BTC/USD for the week: growth in the first half and decline in the second. Source – CoinGecko

Bitcoin supply volume, with activity ranging from one week to one month, continues to decline, reaching its lowest level since October last year. This means that many investors are not selling or buying BTC amid market uncertainty and conflicting analyst estimates.

Bitcoin supply with last activity between 1 week and 1 month: The current level is the lowest in 4 months. Source – Glassnode

At the same time, the change in the value of bitcoin continues to be in direct proportion to the dynamics of the S&P 500 index, while gold has been showing a steady increase in recent times. Thus, most investors do not consider bitcoin as a defensive asset at this stage.

The dynamics of the cost of bitcoin, the S&P 500 index and gold. Source – Santiment

According to CoinGecko, the capitalization of Ethereum has declined, and the main altcoin is not attracting investors in terms of a store of value. Ether fell more rapidly compared to Bitcoin in the second half of the week.

Weekly change in ETH/USD: price decline in recent days. Source – CoinGecko

Investors have become less and less willing to list ETH on exchanges lately, as they do not see real opportunities for short-term profits through trading. Loyal ETH holders adhere to the HODL strategy and are guided by the long-term growth in the value of Ethereum.

The amount of ETH listed on the exchanges: the minimum level for the last month. Source – Glassnode

The average size of transactions in the Ethereum network also reached a minimum in a month, i.e., the main outflow of capital has already ended. However, a slight correction is still possible.

Average (median) size of Ethereum transactions: the minimum level for the last month. Source – Glassnode

Tether’s market capitalization has stabilized at its current level of $79.76 billion, fluctuating around 0.01% compared to last week. The “crypto winter” has also reached stablecoins, which means that there is a high probability of approaching a local minimum of the crypto market.

Tether capitalization dynamics for the week. Source – CoinGecko

The share of hodlers increased slightly (by 8%), confirming their higher stability during periods of the global crypto market recession.

Structure of Tether holders by USDT holding period. Source – IntoTheBlock

The structure of the TOP-10 cryptocurrencies has not undergone major changes. Terra was able to strengthen its position in 7th place due to the effective implementation of proof-of-stake opportunities. According to Staking Rewards, 40.58% of the total supply of LUNA tokens is staking. The successful combination of high returns and low risks attracts many crypto investors.

Events in the crypto industry

• Military actions in Ukraine and sanctions against Russia affect the structure of demand for cryptocurrency – Barrons.
• The eBay platform plans to accept payments in cryptocurrencies, and this has already led to an increase in the price of its shares – Barrons.
• Ukrainian state and non-state organizations are actively using cryptocurrency to attract deposits and contributions from the population; the equivalent of $15 million in cryptocurrency has already been directed to the needs of the army – Bloomberg.
• Mining difficulty dropped for the first time this year (-1.49% in the last 2 weeks) as investors accumulate bitcoin – FX Empire.
• The US Securities and Exchange Commission introduces mandatory registration for all crypto platforms – Yahoo Finance.
• The European Central Bank plans to develop new rules and regulations for the cryptosphere that can prevent attempts to avoid sanctions for residents of the Russian Federation – Bloomberg.
• NFT Dedicated to Professional Baseball Player Mickey Mantle Sells at OpenSea Auction for $471,000 – CoinDesk.
• US Congressmen are developing a legislative framework to attract institutional investors to the crypto industry – Bitcoin News.

Expert opinions

Crypto analysts cannot reach a consensus on the expected dynamics of Bitcoin and the crypto market in the near future. According to Bitcoin News, American investor and writer Robert Kiyosaki believes that the US government will not be able to effectively fight inflation, and investing in bitcoin will provide a high income in the long run. Devere Group CEO Nigel Green thinks bitcoin could rise to $50,000 this month based on an analysis of US dollar reserves. However, Glassnode experts argue that the bearish trend will continue in the coming weeks, and although there are several main scenarios for the development of events, the price of bitcoin could drop to $30,000. Analysts at CoinDesk believe that the crypto market will be highly correlated with the stock market, and the newly formed level resistance in the $40,000 region complicates the recovery of the price of bitcoin.

Expectations for next week

On the 30-day bitcoin chart, you can determine the main levels that determine the possible dynamics of the BTC in the coming days and weeks: strong support in the $37,000–$37,500 region and two resistance levels at $40,000 and $45,000, respectively.

Support and resistance lines in the 30-day Bitcoin market. Source – CoinGecko

In general, there is a high probability of a short-term decline in the price of bitcoin to $37,000. If the bears cannot lower the price even more, a sideways price movement in the horizontal corridor of $37,000-$40,000 is possible. There is no potential for growth to $45,000 at the moment. Solana can improve its position among the TOP 10 cryptocurrencies due to the growing demand for its tokens among gamers and dApps developers.

Sources: CoinDesk, Bitcoin News, IntoTheBlock, Glassnode, CoinGecko, CoinMarketCap, Santiment, Barrons, Yahoo Finance, Bloomberg, FX Empire, Staking Rewards

Disclaimer. Investing in any financial asset carries the risk of losing capital. Nothing in this text can be considered an investment recommendation or an offer to buy/sell any financial instruments. For all their actions in the stock market, each investor bears full responsibility independently.