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MARKET UPDATE

  • A significant boost in the crypto market
  • Market sentiment still low – Investors not confident yet
  • Volume pushing to 2019 highs
  • Extreme volatility as market retrace
  • Bitcoin decoupling from the stock market
  • Global instability: Flight to the US Dollar

VALUATION

  • Bitcoin rebounds, but are the bulls in full control yet? The BTC price needs to cross over an important resistance level

BLOCKCHAIN ACTIVITY

  • Data show that long-term investors are accumulating bitcoin after the price crashed

 

SIGNIFICANT BOOST IN THE CRYPTO MARKET

S&P500 CORRELATION SKYROCKETING

 

BITCOIN LEADING THE WAY AS PRICES TURN UPWARDS

March has, to say the least, been a rollercoaster in the crypto market. After crashing down recently, the market is now picking up speed again.

  • Bitcoin is now “only” down 31.7% in March and has bounced of the lows. At the monthly bottom, the bitcoin price was down over 43%, so this marks a recovery for the leader in the crypto market.
  • Small Caps just got surpassed by bitcoin’s performance, but is still ahead of both Large Caps and Mid Caps.
  • Mid Caps is still struggling, down 41.6% so far in March.
  • Bitcoin’s market dominance saw a small boost last week, while ETH and XRP are struggling to follow the market leader.

 

MARKET SENTIMENT STAYS LOW – INVESTORS NOT CONFIDENT YET?

The Fear & Greed Index stays in the “Extreme Fear” area and is now at 10. Even though the market saw a strong recovery last week, investors doesn’t look too confident just yet.

 

VOLUME PUSHING TO HIGHEST LEVELS SINCE 2019 PEAK

The 7-day average real trading volume* has more than doubled over the last week. A lot of bitcoin is changing hands right now with extreme volatility. The 7-day average daily trading volume is now getting close to the levels we saw back around the peak in 2019.

 

EXTREME VOLATILITY AS MARKET RETRACE FROM THE LOWS

It has been a week with large drops and strong retrace for bitcoin. This is without a doubt reflected in the 30-day volatility, which is pushing to new highs. We’re currently seeing a 30-day average volatility of almost 9%, which is very high, even for bitcoin.

 

BITCOIN DECOUPLING FROM THE STOCK MARKETS?

  • Both COVID19 and the sudden supply shock in oil has led to uncertainty in the global financial markets
  • All major indexes have nosedived over the past weeks.
  • As the market priced in the severity of COVID19, bitcoin crashed. This was in part due to investors having a risk-off approach due to global uncertainty.
  • Past the initial crash, bitcoin mirrored the stock market movements tightly, leading to its highest ever 90-day correlation with the S&P 500.
  • However, the price action last week might indicate that the tide is about to turn.
  • Bitcoin seems to be decoupling from the stock markets as its value is increasing again, while the stock markets remain stagnant.

 

GLOBAL INSTABILITY: FLIGHT TO THE US DOLLAR?

  • Over the last week, central banks all over the world have lowered their interest rates and introduced stimulus packages to dampen the negative effects of the COVID-19
    crisis.
  • As the FED lowered the rates to 0%, a paradigm shift regarding fiscal policies might have eclipsed with ZIRPs* becoming the new normal.
  • The forex markets have been extremely volatile as small currencies have depreciated dramatically against the US dollar, with investors seeking a “safe haven”.
  • Bitcoin, however, had a strong week. An investor would be better off holding bitcoin from Jan 1st till today than holding GBP in the bank.
    Quite remarkable with bitcoin’s recent price crash.
  • Maybe the turbulence in the financial markets contributes in making investors aware of the value of a scarce, geographically agnostic, decentralized currency with a reliable issuance policy?

 

BITCOIN REBOUNDS, BUT ARE THE BULLS IN CONTROL?

  • Two crazy weeks for the bitcoin price, with weekly candles we don’t see that often.
  • BTC has retraced a lot of the brutal crash, and it will be interesting to see if bitcoin truly is decoupled from the stock market going forward in these turbulent times.
  • The level around $6,600 – $6,800 has been a support level for the BTC price several times over the past year.
  • Will it now act as resistance, or will the price break above and continue upwards?

 

HODLERS ARE BUYING BITCOIN NOW

  • Data show long-term hodlers are buying bitcoin now.
  • A metric called the “Hodler Net Position Change” shows the monthly position change of long-term investors.
  • When the metric is above zero (green), it means that holders on average are accumulating BTC.
  • When this metric is below zero (red), it means that holders are selling and most likely taking profits.
  • We saw that the metric dipped below zero in February, as holders stopped accumulating.
  • However, over the past week, holders have once again started accumulating bitcoin.

 

As the global economy adjusts to a “new normal”, the crypto markets will react. It’s just a matter of patience for us to wait and see what that reaction will look like. And we’re watching very closely indeed.