The complete overview of the day's events on the (crypto) markets. Compactly summarized in the market commentary of the CVJ.CH editorial team.
Market Commentary
Bitcoin (BTC) has been in a steady downtrend since the launch of the first US Bitcoin ETF in November 2021, which sent the price to nearly USD 69,000. At the lowest point of the correction (USD 33,100), Bitcoin was over 50% away from last year's all-time high. The uncertain macro environment in terms of inflation and interest rate hikes, combined with the Russian invasion of Ukraine, put strong pressure on the markets. This was especially the case in the first two months of the year.
After a gradual pricing in of these factors, bitcoin was able to recover slightly and establish a new trading range between USD 37,000 and USD 45,000. At the end of March, the first breakout attempt to the upside started, but it failed at the resistance level around USD 48,000. We are again in the old trading range, while the correlation with the traditional markets does not seem to weaken.
Ethereum shows relative strength
Ether (ETH) follows the price of Bitcoin for the most part, as is so often the case in turbulent times. However, some strength can be seen against Bitcoin, which is rather unusual in downtrends. Historically, Bitcoin has set the pace, while Ether has shown more volatility on both the upside and downside. Currently, the second largest cryptocurrency is 35% away from its all-time high. The "digital gold" performed slightly worse with -38%.
Many investors attribute the relative strength to the upcoming Ethereum upgrade, also known as the "Merge." The Ethereum Merge means a change in the consensus mechanism for the largest smart contract platform from Proof of Work (PoW) to Proof of Stake (PoS). The upgrade is expected to be implemented this summer, according to Ethereum Foundation plans. The benefits for Ethereum as a network and Ether as an asset can be summarized as follows:
- Game-theoretic switch of network validators (miners vs. stakers).
- Ether becomes a productive asset (8-12% return per year)
- Reduction of ether emissions for block producers (deflationary pressure on ETH).
- Drastic reduction of the network's energy consumption, which was a hurdle from an ESG point of view.
Altcoins
The majority of the top 20 cryptocurrencies are also moving in line with the Bitcoin price. There are individual outliers that were able to overcome the market-wide correction. But apart from Near (NEAR), not a single altcoin has been green since the beginning of the year (YTD).
Winners of the week were scarce, only the strikingly high number of stablecoins in the top 20 recorded no losses in the past 7 days. The correction hit Dogecoin (DOGE) -1.55%, Near (NEAR) -6.32%, and Binance Coin (BNB) -6.62% the lightest. Meanwhile, Terra (LUNA) -23.53%, Polkadot (DOT) -17.48%, and Avalanche (AVAX) -16.54% suffered the most.
Disclaimer
All information in this publication is provided for general information purposes only. The information provided in this publication does not constitute investment advice and is not intended as such. This publication does not constitute and is not intended as an offer, recommendation or solicitation to invest in any financial instrument, including cryptocurrencies and the like. The contents contained in the publication represent the personal opinions of the respective authors and are not suitable or intended as a basis for decision-making.
Risk notice
Investing in cryptocurrencies, is fundamentally associated with risk. The total loss of the invested capital cannot be excluded. Cryptocurrencies are very volatile and can therefore be exposed to extreme price fluctuations in a short period of time.
