Crypto markets encountered regulatory and macroeconomic risks.

  /  5 minutes read
  • Bitcoin is unable to break above the $25,000 level after numerous attempts.
  • Ethereum is also struggling to close above the $1,700 price level.
  • Coinbase announced the release of Layer 2: Base.
  • Following Coinbase’s announcement, the price and hourly volume of Optimism’s token surpass ATH levels.
  • Following the release of the PCE report, stocks fell, Treasury yields rose, and the dollar strengthened.
  • Despite a positive short-term outlook, central banks’ restrictive monetary policies and increased regulation continue to be a significant burden for a risk-on asset like Bitcoin and other altcoins.

The disinflation thesis that has boosted risk assets over recent weeks is coming under closer examination. The hot inflation data are added to a strong January jobs report and the lowest unemployment rate in 50 years. Following the announcement, BTC lost nearly 2.5% of its value, trailing the Nasdaq 100’s loss of about 1.5%. The perception of risk declined overall in February as a result of investors’ sharply revised expectations for monetary tightening. The likelihood of a rate increase of 50 basis points in March increased to more than 20% from 0% a month ago.
By the Fed’s preferred measures, inflation picked up again last month, putting an end to hopes that it had reached its peak. The headline PCE deflator went up 0.6% from one month to the next, and the annual rate went from 5.3% to 5.4%. Worse, the core gauge went from 4.6% to 4.7%, which is an increase. Last month, both income and spending grew, which kept the pickup going.


After the PCE report, stocks went down, Treasury yields went up, and the dollar got stronger. The yield on a two-year bond went up to 4.8, which is the highest it has been since 2007. Rate hikes are fully priced into Fed swaps for March, May, and June. European stocks went down, and an index of Asian stocks showed that it was likely to go down for a fourth week in a row. This would be the longest losing streak since September. Crude fell, and gold also went down. Investors are getting ready for the possibility that the Fed will keep making hawkish moves, so they are selling stocks and cash and buying bonds.

The Layer 2 announcement from Coinbase:

The Coinbase exchange launched Base, an Ethereum-focused layer-2 (L2) blockchain, on Thursday as a way to join the decentralised ecosystem with its own chain and reach more developers. L2 blockchains build on top of layer-1 (L1) blockchains like Ethereum, Solana, and Avalanche to reduce bottlenecks, constraints, and other network-clogging effects. Instead of putting each transaction on its own L1 chain, L2s group transactions together so that tasks can be done more quickly.


After the announcement, the hourly volume of OP-USD/stable pairs hit more than $70 million. This was the highest hourly volume ever, beating the previous record of $60 million, which was set just a few hours after the token was released. On some pairs, like OP-BUSD on Binance, its price went above all-time highs (ATHs). The Base could bring in a lot of money for Coinbase, which has been trying to find new ways to make money as crypto trading volumes have been going down.

Ethereum Price Analysis:

The Sepolia testnet upgrade for the Ethereum blockchain was successful in simulating the March mainnet Shanghai hard fork.The “Shapella” upgrade, which combines the names of the upcoming “Shanghai” and “Capella” hard forks, was successfully added to the testnet on February 28. The upgrade will be made available on the Ethereum Goerli testnet as the final step before the Shanghai fork goes live on the main network. This is expected to commence in March.

The Ethereum token price bounced off the immediate support level at $1560, which shows that the bulls are fighting hard to defend this level.


The ETH/USD pair is still in a range, and it will lean towards the bulls if they push the price above $1,700 and close above it. The pair will then try to break through the resistance level of $1,766 and start moving toward the psychological level of $2,000. But the bearish case can’t be ignored right now. If the price turns down again from around $1,672 resistance, it will show that bears aren’t ready to give up. That may make it more likely that the price will drop below $1,560. The price of the pair could then fall to $1,462 and then to $1,354.

Concluding Thoughts:

Bitcoin and the US stock markets are both trying to start the week on a good note, but we aren’t completely convinced how the markets will react in the short term. Bitcoin is still having trouble and is running into a lot of trouble at $25,000. At the moment, BTC/USD is up about 1.25 percent in February 2023. This isn’t much compared to the past, but it’s still a big deal for keeping the year’s gains. February is almost over, and there doesn’t seem to be much going on with BTC. At the beginning of March, there won’t be as much macroeconomic data coming out of the United States. The amount of money in the world is expected to go up in 2023, but it has gone down recently.
There are no signs that the economy is slowing down, and another report on inflation last week showed that it was higher than expected. This puts more pressure on the Federal Reserve to keep raising interest rates faster and for longer than the markets expect. Until Bitcoin breaks above the price level of $25,000, there is a chance of a pullback that sends the price of BTC down to the $21,000 level. In any market, it is hard to catch the bottom. So, traders should try to build a portfolio when they think the downtrend has ended and a basing pattern has started. Instead of buying the whole amount at once, they could slowly build a portfolio and try to finish buying before the asset gains steam and goes up.

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