Bitcoin (BTC) Puts a Volatile Show; Price Grazes $28K In Weekend Action

The crypto market served more than the wonted cocktail of price swings and liquidations this week. Picking up at the same pace, the weekend’s price movement has added to arguably the most volatile action of any week. Bitcoin price sustained oscillations in both directions on account of sentiment shifts but stayed green for the most part – as did most altcoins. Here is a recap of the market action and the headline events to watch out for in the coming week:

Bulls eye first close above 28,000 since June 2022

Bitcoin and most altcoins printed decent green candles towards the end of the week on the back of Asia’s early Friday positive action. The niche darling coin strode past $26,500 on Friday, making up for ground lost in the near-three-week slump between Feb 21 and Mar 10, seen on the 30-day BTC price chart.

BTC/USD YTD chart. Source:TradingView

The swift ascent above the $25K resistance zone, which had been out of reach since last August, brought $28K in sight as the immediate technical hurdle for bulls. Heading into the weekend, the BTC/USD pair made another leap above $27,000, consolidating around the mark for the better part of Saturday.  Bitcoin has continued its northward movement in the last few hours, challenging the resistance at $28,000 on the hourly-time frame chart and breaking through the 200WMA. The BTC/USD pair was at writing, hovering at around $28,200 – up 27.18% over the week and up 21.75% over the past month.

Bitcoin (BTC) weekend price action

The latest price breakout has strengthened bullish holders’ resolve to keep the rally above the support at $26,800 at least through to the weekly close a few hours away. Notably, this week’s leg up pushed the total crypto market above the $1.15 trillion mark for the first time this year. The figure has continued bulging over the weekend and was observed approaching $1.2 trillion at writing. Market commentators chalk up the recent market action to depressed liquidity in the market and high buying pressure.

Bitcoin emerges as the biggest beneficiary of the US and Europe banking crisis

A theme of bank collapses has prevailed in March, increasing investors’ appetite for other alternative assets like crypto. Last week, Silicon Valley Bank went bust after failing to address liquidity issues through a share offering. The reports of dumping its assets at a loss raised concerns among depositors who flooded to get their funds from the bank, fearing it would collapse. Intervention from the US government (Federal Reserve, the Treasury, and the FDIC), which furnished a bailout, helped the bank regain its footing momentarily. First Republic Bank, another caught in a tight spot this week after its bank’s shares tumbled, also got handed a lifeline in the form of fund injection from almost a dozen financial institutions.

Total assets of the Federal Reserve

In Thursday’s full committee hearing on the Fiscal Year 2024 Budget, US Treasury Secretary Janet Yellen assured Congress that the US banking system is robust. Yellen added that the Federal Reserve is still in a position to underpin the banking system with a new lending facility. Meanwhile, Credit Suisse received 50 billion Swiss francs (US$54 billion) from the Swiss National Bank, helping it navigate the predicament.

Macroeconomic data in the picture again

Investors also welcomed major macroeconomic news in the US and Europe. On Tuesday, the US Department of Labor released February’s inflation data, which mostly met market expectations except for the US Consumer Price Index (CPI), which adjusted 6% upwards on year last month. The figure represented a deceleration from 6.4% in January. Still, it remains far from the Fed’s targeted annual inflation rate. The European Central Bank on Thursday announced an increase of 50 basis points to its benchmark interest rate.

The implosion of banks and upsetting events around them have weighed on the debate of interest rate hikes, with industry experts predicting that the Fed could be compelled to consider the possibility of no hike. The increasing probabilities of either a 25-bps hike or an unchanged figure starkly contrast the previous week’s market pricing of a 50-bps hike prior to the developments around the banking system. Paying regard to this unpredictability, the US and European economic policies remain of interest to market participants.

Target rate probabilities

Neither the Federal Reserve in the former’s case nor the European Central Bank (ECB) hinted at a decision on the next adjustments to the interest rates. That said, a suspension of interest rate hikes would present the market with a moment of relief. The turmoil, borne out of the macroeconomic data and upsetting reports around established banking firms, appeared to work in favor of the digital assets market, which has been on a tear. In particular, the fears of the banking system coming under intense pressure motivated some to move their funds into crypto.

Bitcoin's March price course

Bitcoin and other alt prices reacted positively to reports around inflation and speculations that the Fed might pivot in their monetary policy. Though Bitcoin initially dipped alongside equity markets in reaction to the midweek banking and economic developments, it quickly bounced on the narrative of being a haven for investors. The soaring prices on Sunday have seen more than 43,000 traders liquidated in the past 24 hours, with affected blown orders piling to $125 million, as per Coinglass data. Squeezed shorts make up 56% of the liquidated volume during this period.

Bitcoin dominance nears 48%, setting new high

In light of recent market shifts, some market commentators have alluded to the alt season being around the corner. Still, Bitcoin has retained its status, adding to its dominance at the expense of alts like Ethereum (ETH) and Solana (SOL). Though some altcoins have posted impressive gains (Ethereum is up to $1,800 at writing) amid the market frenzy, the focus has remained on Bitcoin.  The BTC dominance figure has adjusted by 4.5% since Mar 11 to a nine-month high of 47.45.

The correlation between Wall Street stocks and crypto has also popped as a notable observation. Bitcoin has been breaking away from traditional markets, reflected in the degree of divergence between the two markets thus far this year.

BTC vs S&P 500 vs Nasdaq Composite

Crypto analytics platform Santiment separately observed earlier this week that despite the prevailing volatility, Bitcoin’s rate of network remained healthy. The observations, on the surface, imply that more participants have found the asset worth exploring undeterred by the fluctuations around its price.

“In the past two months, the total amount of $BTC addresses has grown by 1.71M, a 3.95% increase in a relatively short period.” the market intelligence firm remarked on the growing supply of Bitcoin in exchanges.

Contrarily, the wealth management industry has maintained apprehensiveness towards Bitcoin. ByteTree Asset Management shared this week that Bitcoin funds have been shrinking – the BTC volume accounted by close-ended funds, spot and futures-focused ETFs in the US, Canada, and Europe have been tracked to a 17-month low.

Price action and market commentary

Heading into the new week, events around the US banking crisis remain of crucial interest as a catalyst, boosting crypto markets. Though combined efforts of the US government and other banks appear to have quelled contagion concerns, the banking industry is still on edge. Some analysts contend that the fragility of the central banking system could continue drawing more investors to bitcoin, which presents a unique value proposition.

While BTC/USD has raced past $26,000 twice this week, others have dismissed optimistic views in the near term, even as spot and derivatives volume figures swell.

“BTC to $28.5-29K seems likely this weekend. The question is, what will the reaction be from there? Probably some scalp short regions. HTF buy the dip entry around $25K as a potential range to establish,” popular trader Van De Poppe told his Twitter followers.

Worth noting, Bitcoin’s exploits above $28,000 have presented a profit-taking opportunity for some holders. The Bitcoin profit-to-loss volume ratio has been gravitating towards high-profit volume, signaling potential near-term selling pressure. Pushback at $28,000 has started creeping in but clearing this mark could motivate bulls to challenge $30K in the coming week.

To learn more, check out our Investing in Bitcoin guide.