The cryptocurrency market experienced a growth of 8.341% last week, reaching a value of $1.078 trillion from $0.995 trillion. The market conditions during this period were highly volatile due to several closures in the banking sector, leading to structural damages in the stablecoin market. Despite the challenges, the opening on Monday with support from Fed provided a sense of relief to the crypto markets. However, the banking sector continued to face challenges leading to multiple bank stocks plummeting, with Credit Suisse being one of the banks that attracted public scrutiny due to issues regarding its reporting on financials. The macroeconomic environment remains fragile, with concerns about inflation and potential rate hikes contributing to the ongoing volatility. Although the Switzerland bank has provided a $54 billion lifeline to assist Credit Suisse, the sector continues to experience significant breakdowns at the infrastructure level. Despite these challenges, the rate releases this week had a net positive impact on the crypto markets, with the upcoming rate hikes scheduled for next week expected to be a key event to monitor.
Bitcoin Price Analysis:
Bitcoin has pulled off a remarkably impressive one-day rally while the US financial system is collapsing. Bitcoin is back above $24,000 despite the fact that it did decline on Thursday and Friday. Just at $25,000, Bitcoin hit a regional high. This was a crucial area of resistance because it was where BTC peaked during its most recent relief rally and BTC repeatedly failed to break it. $27k would be in sight as a return to levels from last Q2 if the $25k current resistance area around 2 were to break out. The first area of support on the downside is $20k, so keep an eye on that area. The recent gains would be undermined by a break lower from that point, and new volatility would likely result. The bulls will probably maintain control as long as BTC can maintain $18,000 as the next crucial level of support.
On the topic of recent economic data releases, the Consumer Price Index (CPI) met expectations while the Core CPI slightly exceeded expectations with a higher print of 0.5 instead of the expected 0.4. Despite some concerns about the higher Core CPI, the market saw a positive rally due to the majority of data releases hitting expected marks after several misses in the past. Additionally, the Producer Price Index (PPI) and Core PPI data were better than expected, which is a bullish signal for the markets in the medium term.
However, it is important to note that the banking sector’s potential collapse could have a significant influence on the Federal Reserve’s upcoming rate hike decision. The next rate hike is scheduled for March 22nd, and market expectations have been fluctuating between a 0-50bps rate hike. Currently, the highest probability is for a 25-bps hike, which is more crucial than previous rate hikes as the macroeconomic environment is currently fragile.
While expectations have reduced from a potential 50-bps hike, any significant changes in the market structure could cause a slight move to the downside. A 25-bps, while lesser than the previously expected 50-bps hike can still add to the already challenging situation for markets. A 25-bps or lesser rate hike can cause the markets to have a sideways to slightly positive move, but a sustainable move is needed for the crypto markets to inch higher from the $26,000 mark.
Bitcoin returns were 13.81% for this week. The Alpha Blue Chip Focused Strategy returns were 16.26% during the same period (09 MAR – 16 MAR). The Top Cap Digital Assets Strategy and Arbitrage Opportunities and Balanced Strategy returns were 7.58% and 6.02%, respectively.