Market Wrap: Bitcoin Stuck Below $50K, and Blockchain Data May Show Why
Bitcoin ended the first week of March with little fanfare as the market reset after the prior week’s 21% plunge. There are more signs the global economic recovery might come faster than previously expected, and traders are speculating on what that might mean for the largest cryptocurrency.
This week’s muted price activity in bitcoin showed in the trading volume from eight U.S.-focused exchanges CoinDesk tracks. It has been flat over the past week, roughly a third of levels seen recently.
“Bitcoin is consolidating around $50,000 after rebounding from lows earlier in the week,” Jason Lau, chief operating officer at San Francisco-based crypto exchange OKCoin, said. “Most recently, its price action has been hovering within this range, while open interest in bitcoin futures has also remained consistent.”
$50,000 also appears to be a key short-term resistance level, according to IntoTheBlock’s newsletter Friday, citing a key blockchain data metric In/out of the money around price (IOMAP).
“A large cluster of addresses (1.46 million) and volume (650,970 BTC) had been bought slightly below $50,000,” IntoTheBlock wrote in the newsletter. “This price range, which already saw high levels of trading activity, is expected to act as strong resistance short-term as investors in this price range may look to break-even on their positions at this point.”
At the same time, another large cluster of addresses and volume, bought in a range of $45,600 to $47,000 currently at the money, are likely to provide strong support, IntoTheBlock’s data shows.
“Ultimately, a break past $45,000 may mean bitcoin will retrace further, while a breakout past $50,000 may suggest it is poised for new highs,” IntoTheBlock added. “These are the levels to watch out for before being certain of the correction being over or not.”
Investors will also have to weigh macro factors including a better-than-expected February job report in the U.S., as well as surging bond yields.
Ether underperforms bitcoin, market watches July hard fork
Ether (ETH), the second-largest cryptocurrency by market capitalization, was up a little on Friday, trading around $1,534.25 and in the green 0.11% in 24 hours as of 21:00 UTC (4:00 p.m. ET).
At press time, ether’s price was down approximately 25% from its all-time high at $2,036.55 on Feb. 19. That’s a steeper drop-off than bitcoin 17% retreat from a record $58,332.36 on Feb. 21.
The main reason ether has been underperforming “is that high ether prices are detrimental to Ethereum’s primary use case as a smart contract platform, making transactions extremely costly and resulting in activity moving to other platforms,” said OKCoin’s Lau.
As CoinDesk reported, Ethereum Improvement Proposal (EIP) 1559 is scheduled to take effect in July – regardless of the mining industry’s discontent with the proposal – with the goal of fixing part of Ethereum’s high transaction cost problem.
Digital assets on theare mostly in green Friday. Notable winners as of 21:00 UTC (4:00 p.m. ET):