Bitcoin and Ethereum: Will crypto markets stay afloat?

Bitcoin's relentless rally ever since Silicon Valley Bank’s collapse caused a mini meltdown earlier this month is showing signs of tapering off, but not before the benchmark cryptocurrency chalked up considerable gains in the process.

Since the fateful day of March 10, when SVB was unable to sustain itself amid a bruising bank run, BTC/USDT has surged over 40%, peaking at US$28,470 on Monday, March 20.

Since then, the pair has cooled off, posting small losses on Monday and then adding around 1.4% on Tuesday, while the pair has remained essentially flat at US$28,125 this morning.

Bitcoin (BTC) has been on a rollercoaster since the FTX collapse last November – Source: currency.com

Open interest in bitcoin futures remains at a nine-month high, indicating sustained volatility plays among traders.

The question for the market is: Can bitcoin stabilise at this price point?

Much of the coin’s recent strength was due to its perceived safe-haven status as the traditional markets went into a spin, so it stands to reason that when things calm down, so will the price of bitcoin.

If investors decide to take profits en masse, we could see some price deflation.

There is also the spectre of ongoing interest rate hikes, less likely now than they were merely two weeks ago, but considerably higher-than-expected inflation data emerging from the UK this morning proves that the issue persists, and thus so could rate hikes.

Risk-on assets tend to take the backseat whenever central bank hawks take the wheel, and with interest rate decisions from the US and UK due over the following 24 hours, it’s a headwind that cannot be ignored.

That being said, Matt Maximo and Michael Zhao at Grayscale suggested that “bitcoin may emerge as a strong performer regardless of the outcome”, since safe-haven money allocations will remain buoyant for some time to come.

For now, Binance’s order book shows strong support at the 28k mark, which may act as a buffer to losses below this point, while selling pressure is most evident at US$28,400.

Ethereum (ETH)’s price action has been more muted than bitcoin’s although the second-largest cryptocurrency by market capitalisation has still benefitted from the recent turmoil.

ETH/USDT has rallied 30% since March 10, peaking at SU$1,840 on Sunday March 19. The pair has been fairly volatile since, with bulls and bears jostling between the 17k and US$1,850 price range.

At the time of writing, ETH/USDT was changing hands at US$1,790, having fallen by 0.6% in early trades. Ether bears have pitched up a considerable sell wall at US$1,807.

Binance’s order book shows bearish resistance at US$1,807 – Source: binance.com

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Ripple surges ahead

Ripple Labs’ XRP token steamed ahead in the past 24 hours, racking up around 20% to bring the payment token to a four-month high of 0.457 cents.

As has been the case with previous rallies, it correlates to renewed optimism that Ripple Labs is set to trump the US Securities and Exchange Commission (SEC) in the long-running SEC v Ripple Labs lawsuit launched way back in December 2020.

The regulator contends that XRP is an unregistered security and thus Ripple Labs illegally raised US$1.3bn from its initial coin offering.

A favourable pending outcome for Ripple Labs is evidently being priced into the market.

The rest of the top-20 altcoin set has remained relatively muted, with Polkadot (DOT), Shiba Inu (SHIB), Tron (TRX) and Litecoin (LTC) moving into week-on-week losses in the low single digits.

Global cryptocurrency market capitalisation added 2.8% to US$1.18tn overnight, while total value locked in the decentralised finance (DeFi) space added 1.3% to US$48.8bn.

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