March 23 Crypto Market Roundup

We are seeing truly unprecedented events unfolding across the world on a daily basis. With this in mind, I’d like to reflect on the week that was, and look ahead to what the new trading week may bring for the cryptocurrency market.

Crypto Market Recap

Last week, the cryptocurrency market staged a much-needed recovery following the March 7th to March 12th rout which saw more than $150 billion wiped-off of the value of the crypto market.

Bitcoin moved higher on increased speculative and retail buying demand, whilst breaking its recent correlation with U.S equity markets and also dragging most altcoins higher in the process.

To put last weeks recovery in the cryptocurrency market into context, Bitcoin finished the week over 50 % above its current 2020 trading low, and nearly 20 % higher on the week.

This came as a stark contrast to the main U.S equity indices, which continued to decline over coronavirus and economic fears, as they closed in double-digit negative territory for the week and down more than 25% down on the year so far.

Global central banks also stepped-up the fight last week, playing into the much-adhered to crypto narrative that continued money printing will drive the value of the U.S Dollar and other currencies down, and drive demand for Bitcoin and other digital assets

The U.S Federal Reserve brought interest rates to zero, increased its bond holdings to $700 billion, and increased its funding of repurchase operations to about a trillion dollars a day, and eased its requirements for banks in a bid to stimulate lending.

The European Central Bank also announced an aggressive €750 billion Pandemic Emergency Purchase Program (PEPP) to purchase public and private sector asset purchases in a bid to stimulate the economy, while the Bank of Japan launched a $12 billion emergency bond purchasing program.

Trading activity at the major cryptocurrency exchanges also exploded last week, with Coinbase, Bitstamp, and Bitfinex seeing a huge bump in volume from retail traders and first time investors.

However, futures exchanges recorded low trading volumes, as institutional money remained sidelined, following the early month plunge in the crypto market.

The Week Ahead

Looking at the week ahead Bitcoin and the broader cryptocurrency market could be poised for a big move.

The major themes I am paying attention to this week are Bitcoin’s continued ability to decouple from traditional markets and whether the crypto market can hold up without institutional participation.

Something to watch out for, and perhaps slightly prematurely, is that with large scale job losses happening across the globe Bitcoin traders may need to liquidate at least some of their holdings to pay for everyday expenses.

It is also worth paying some attention to U.S economic data this week. The impact of the coronavirus on the U.S economy will soon start to show up in the macro data.

The economic numbers coming from the Chinese government so far have been horrible; we will probably start to see the same from the United States.

Watch out for manufacturing, GDP, durable goods orders, weekly jobless claims, and inflation prints this week. The big really everyone will obviously be watching is next weeks U.S monthly job report.

In the short-term, we’re likely to see increased volatility in Bitcoin. This is evidenced by the Average True Range (ATR) indicator, which is currently generating its highest reading since June 2019.

Bitcoin (BTC) has been struggling to move past its former yearly low,  around the $6,430 level, and also its yearly opening price, around the $7,120 level. The risk from here is a slump back towards the $5,000 level if this dynamic remains in place.

It is also noteworthy that the calculated monthly pivot point for BTC/USD is found at the $5,955 level. Watch this number this week as it could be a major short-term sentiment gauge for the cryptocurrency.

Ethereum (ETH)has been looking relatively tame after staging a strong reversal from the $150.00 level last week. Watch out for a sharp directional move once the $125.00 to $150.00 price range is breached with conviction. The implied bearish target of an unfolding head and shoulders pattern is just below the $60.00 level.

Chainlink (LINK) could be a major bellwether for how the altcoin space performs during the week ahead. LINK/USD bounced sharply from long-term support last week, the ever popular cryptocurrency has a big week ahead indeed. A drop below the $1.45 level would be very bearish for the cryptocurrency over the medium-term.