Consolidation was the name of the game in the cryptocurrency market on Tuesday, and will likely continue to be the case for the foreseeable future, as traders look to rebalance their portfolios amid a lull in any major ecosystem developments or market-moving announcements.
Stocks traded mixed ahead of a busy week of earnings reports and the upcoming interest rate announcement from the Federal Reserve, which is expected to hold rates steady for the time being. Whether cuts will happen in March or May is the subject of intense debate on Wall Street as markets hang near records, with the CME FedWatch tool showing expectations of a March rate cut are now down to 41.7%.
At the closing bell, the Dow finished higher, recording a gain of 0.35%, while the S&P and Nasdaq were in the red, down 0.06% and 0.76%, respectively.
Data provided by TradingView shows that Bitcoin (BTC) traded in a range between $43,130 and $43,875, with the bulk of time spent around support at $43,500, where it trades at the time of writing.
BTC/USD Chart by TradingView
“The market seems to be pretty much certain that the Fed will hold rates steady, but what will really matter are any comments that might indicate the direction they will take for the following meeting,” said market analyst Bloodgood. “Regarding that one, which will be on 20 March, expectations are pretty much split down the middle between keeping rates unchanged and a 25 bps rate cut.”
“There’s no doubt that the March decision will also largely depend on economic data that will come out in the meantime – especially the CPI reports for January and February – but the fact that a cut is very much on the table means that any comments by Powell tomorrow will have an outsized impact on the market,” he said.
Bloodgood also noted that “the US [trading] session has become much more important for BTC now that the ETFs are live.”
“If you’ve been around in the space for a while, then you’ll know that different time zones have had different effects on the market – for example, the infamous Asia session was particularly brutal for quite some time – and while NY exchange hours were always fairly important, that is becoming even more the case now,” he said. “Especially on Coinbase, volume is becoming more concentrated in TradFi trading hours, so we’re likely to see thinner moves and overall less decisive price action outside that time window.”
Digging into the Bitcoin price action, Bloodgood noted that, “The $38k and $36,500 levels are MUST hold zones if we want to see continuation soon.”
BTC/USD 1-week chart. Source: Substack
“At the time of writing BTC is trading inside the weekly range between $42k and $47k, with the local high at $49k,” he said. “The local high has been formed slightly above the range high and will be a key level to break if we want to see $50k soon.”
“The daily chart paints a clear picture of how the breakout above $42k occurred – in fact, it was a textbook breakout,” Bloodgood said.
BTC/USD 1-day chart. Source: Substack
“The bottom was formed with a hammer candle formation which was soon followed by a decent pump,” he said. “In my books, the bullish scenario is back on the menu, as long as we remain above the weekly level.”
“Even though Grayscale selling was far from the only driver of the recent correction on Bitcoin, it’s still worth noting that it seems to be slowing down,” he said. “While GBTC outflows have averaged between $500 and $600 million, the dumping slowed to just under $400m on Thursday and only $255m on Friday. Friday was also the only net positive day last week, with $14m net inflows overall, but Monday is when things really turned around: Grayscale sold less than $200m, while net inflows were $254m.”
“The key thing here is that Grayscale running out of clips to dump is definitely bullish. Regardless of how much of a role that sell pressure played for the correction itself, there’s no doubt that having it dry up will be good for the price action going forward,” Bloodgood concluded. “If we also see higher net inflows sustained in the coming days, that will make the market more confident that the interest in the ETFs is here to stay.”
Mixed day for the altcoin market
Altcoins traded mixed on Tuesday, with the top 200 evenly split between winners and losers.
Daily cryptocurrency market performance. Source: Coin360
Echelon Prime (PRIME) recorded the biggest gain with an increase of 17.7%, followed by a 10.5% gain for Treasure (MAGIC), and a 9.8% increase for Render (RNDR). API3 (API3) led the losers with a decline of 9.4%, while Ondo (ONDO) fell 8.3%, and dogwifhat (WIF) lost 7.2%.
The overall cryptocurrency market cap now stands at $1.67 trillion, and Bitcoin’s dominance rate is 51%.
