Cryptos weekly market analysis
We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on Friday, March 27.
Bitcoin made another attempt to surpass the $6,800 and $6,850 resistance levels, but it failed. The pair BTCUSD retreated from 6,850.
On the downside: the price could test the 6,550 and 6,500 support levels.
On the upside: the bulls need to gain pace above the 6,800 and 6,850 resistance levels to set the pace for a sustained upward move above 7,000 in the near term.
Ethereum is still stuck in a key range below the $140 and $142 resistance levels.
On the upside: if ETHUSD climbs above 142, there are high chances of a strong rise towards the 150 and 155 resistance levels.
On the downside: the first key support is near 135, below which it could test 130. The main support for the current trend is seen near 125.
Bitcoin cash is showing a lot of positive signs and it is slowly rising towards the key $230 resistance.
On the upside: a successful break and follow up move above the 230 barrier could spark a solid rally. The next major hurdles are seen near 240 and 250.
On the downside: a major support is forming near 220.
Litecoin is up around +4.0% and it surpassed the $38.5 and $40.0 resistance levels.
On the upside: LTCUSD is showing positive signs and it could rise above the 41.2 resistance. Any further gains may perhaps push the price towards 44.5.
On the downside: 38.5 is now likely to provide support.
XRP performed well today and it gained more than +8.0%. There was a clear break above the $0.164 and $0.170 resistance levels. The price tested 0.180 and it is currently correcting gains. On the downside, the previous resistances near 0.170 and 0.165 are now likely to act as supports.
In the past three sessions, many small-capitalization altcoins jumped more than 5%, including QNT, MKR, CHZ, REN, SNT, VET, ELF, BTM, THETA, NMR, ENJ, BNB, REP, and DGB. Out of these, QNT gained more than 35% and MKR is up close to 20%.
Panic in Bitcoin market ‘dissipating,’ miners returning
Sead Fadilpašić (Cryptonews.com) writes that “Bitcoin on-chain activity and again increasing hashrate suggest positive moves in the market and the largest cryptocurrency network, according to blockchain analysis firm Glassnode.
With the price stabilizing and investors slowing down the portfolios readjustments, on-chain activity has seen decreases across the board. Compared to the last couple of weeks, when the transactions were fewer in number but larger in value, transaction count now has stayed relatively stable in relation to transaction volume, which also “decreased significantly” since last week, the firm said in their latest report”, the author reports.
“This implies that on-chain activity is returning to more regular levels, with transactions being of lower value on average,” they said. “This return to more normal activity suggests that the panic triggered by the price crash is dissipating.” If bitcoin can break past that $7,000 mark, the prices could recover to levels seen at the beginning of 2020, they estimated.
At the end of the last week, the hashrate, or the computational power of the Bitcoin network rose by +5.4%. Glassnode too stresses this, saying that hashrate is starting to bounce back, “sitting at more than 10x higher than its lowest point yesterday.” Subsequently, after a major drop in BTC mining difficulty last Thursday, Bitcoin mining pool BTC.com estimatee that the next adjustment in less than two weeks is going to be smaller (-14.6%) than estimated the day before (-16%).
However, since we’re living in the times of the COVID-19 pandemic, a potential economic crisis, controversial government actions, and people reacting to any and all of it, affecting the prices of crypto, things are more unpredictable than usual. Therefore, the way the market and miners respond to this adjustment may not follow historical trends, according to Glassnode.
However, “given that miners are returning to the network now that mining has become easier,” the firm concludes, “it appears that the recent hash rate decrease represented simple business-driven decision-making, rather than capitulation or lack of confidence.”
As Ryan Watkins, an analyst at crypto researcher Messari, noted, the key nuance skeptics fail to grasp when thinking about Bitcoin mining, is that the set of Bitcoin miners consists of numerous independent entities with their own cost structures and balance sheets: “Miners don’t rise and fall as one, they rise and fall as individuals. Mining is a competition, and the miners that are least competitive simply just lose.”
S&P500 more volatile than Bitcoin in March
Omkar Godbole (Coindesk.com) writes that “In a role reversal befitting these topsy-turvy times, Wall Street has recently seen more turbulence than the top cryptocurrency. The S&P 500’s 30-day volatility of daily returns, or historical volatility, jumped to 200% on Mar. 25, nearly 10 times the average volatility of 27% observed in the preceding 12 months, according to the Federal Reserve Bank of St. Louis.
Meanwhile, bitcoin’s volatility gauge stood at 138% compared to the average volatility of 65% seen in the March 2019-February 2019 period, as per CoinDesk’s Bitcoin Price Index. The 30-day volatility of daily returns calculates the standard deviation of the daily gain or loss from each of the past 30 trading days and is usually expressed in annual terms irrespective of the time period.
Put simply, it gauges fluctuations from the mean but does not measure the direction. So, when we say that bitcoin’s 30-day volatility of daily returns is less than the S&P 500’s volatility reading, it means the cryptocurrency has witnessed smaller deviations from the average compared to the equity index over the last 30 days.
The S&P 500’s volatility began rising in the first week of March as the coronavirus outbreak outside China gathered pace, stoking fears of a global recession.
The situation worsened in the second and third week, as the persistent sell-off in stocks triggered margin calls, forcing investors to treat traditional safe-haven assets like gold and U.S. Treasurys as sources of liquidity.
That further boosted uncertainty and added to the price volatility, so much so that 4 to 5% daily moves have become a new normal. In fact, the volatility in the equity market recently rose above the lifetime average of bitcoin’s 30-day volatility. So by this one measure the benchmark equity index has become a relatively risky asset.
Of course, bitcoin, too, has witnessed its fair share of price volatility with institutions exiting the market amid a global dash for cash and price drops getting exaggerated due to forced long liquidations on derivative exchange BitMEX. The situation, however, has been somewhat better lately compared to Wall Street in terms of volatility.
The cryptocurrency’s 30-day volatility hovered below its 12-month average of 65% in the first 11 days of the month. However, on Mar. 12, prices fell by a staggering 39% from $7,950 to $4,777 and printed lows under $4,000 on the following day.
With the sudden price crash, the 30-day volatility jumped to 106% on Mar. 12 and has remained elevated ever since, despite the price recovery and relative stability in the $6,500 to $7,000 range observed this week.
Looking forward, the volatility in stock markets may subside, as the central banks and governments across the world have launched monetary and fiscal lifelines to contain the economic fallout from the virus outbreak.
The Fed has cut rates to zero and announced an open-ended asset purchase program, while, the U.S. Senate approved a $2T fiscal stimulus plan. A potential decline in the stock market volatility could conceivably also tame volatility in the bitcoin market. That said, the next halving of miners’ rewards is due in May. As a result, bitcoin could again return to its traditional status as a more risky asset than stocks.”