1. Market Wrap: Bitcoin Near $56K, Struggles With Flat Activity on Exchanges
As of March 21, there were fewer than 2.44 million BTC available on exchanges, the lowest amount since August 2018.
Bitcoin (BTC) trading around $55,772.02 as of 20:00 UTC (4 p.m. ET). Slipping 2.98% over the previous 24 hours.
Bitcoin’s 24-hour range: $55,685.09-$58,407.62
BTC trades below its 10-hour and 50-hour averages on the hourly chart, a bearish signal for market technicians.
Bitcoin entered the week seeking a direction, with subdued trading volume and exchange inflows continuing to drop.
“There’s not much action, and prices have been stable around the $56,000-$58,000 mark,” Alessandro Andreotti, an over-the-counter (OTC) bitcoin broker, told us.
As of March 21, there were fewer than 2.44 million BTC available on exchanges, the lowest amount since August 2018, according to blockchain analytics firm Glassnode.
The decreased bitcoin balances on exchanges have been seen as a bullish sign — that fewer holders are preparing to take profits or dump the cryptocurrency, suggesting minimum selling pressure in the near future, as reported previously.
As bitcoin’s inflow to exchanges continues to decrease, it also suggests that price volatility, which has remained high, is mostly driven by “speculative demand” rather than any fundamental factors, Philip Gradwell, chief economist at blockchain analysis firm Chainalysis, wrote in his newsletter on March 19.
At press time, the oldest cryptocurrency is changing hands at $55,772.02, down 2.98% in the past 24 hours. The sudden price drop to as low as $55,685.09 in the past few hours came after U.S. Federal Reserve Chair Jerome Powell Jerome Powell said cryptocurrencies are “not really useful stores of value” during a virtual panel discussion on digital banking hosted by the Bank for International Settlements.
2. Bitcoin Steadies Near $54K After Biggest Drop in a Month
The drop below $55,000 comes at a time when cryptocurrency fund inflows have been on the decline.
Bitcoin stabilized near $54,000 early Tuesday after posting its worst daily loss in almost a month.
Bitcoin (BTC) was trading around $54,680 as of 12:50 UTC (8:50 p.m. ET), after falling late Monday to around $53,715, the lowest since March 16.
The largest cryptocurrency fell 5.8% over the previous 24 hours, for its largest daily decline since Feb. 23, according to Bitstamp exchange data. Bitcoin’s 24-hour range: $53,795.15-$58,407.62 .
BTC’s 4-hour chart shows seller volume has been building alongside a falling price, a bearish signal for market technicians.
The drop below $55,000 comes as cryptocurrency fund inflows have been on the decline, down by roughly 58% to $99 million last week.
Trading volume was also strong from sellers on Monday, with the largest 4-hour print by the bears in over a week.
3. ‘Altcoin Season’ Leaves Some Bitcoin Alternatives Frozen
Index data points to a changing of the altcoin guard, as Web 3.0 surges.
Is it altcoin season? This week, Grayscale Investments announced a slew of new trusts, each focused on smaller-cap “altcoins.” Meanwhile, Ethereum’s native currency, ether (ETH, -3.63%), is outpacing bitcoin (BTC, -3.41%) so far this year, rising 142% as of Thursday. A dozen other assets on the CoinDesk 20 — our list of the assets that matter the most to the market — are also ahead of bitcoin, led by Web 3.0 assets cardano (ADA, -3.98%) and algorand (ALGO, -3.42%) and DeFi asset 0x (ZRX, -4.75%).
“Altcoin season,” or “alt season,” is a meme for the idea that bitcoin returns move cyclically against other crypto assets, or “altcoins,” as in, alternatives to bitcoin. The notion is that investors take their bitcoin profits and play the altcoin casino with house money, and vice versa.
There’s evidence to support that theory, at least anecdotally. In the fourth quarter of 2020, for example, bitcoin outran everything in the Digital Large Cap Index (DLCX), an index that represents 70% of the crypto markets’ value. The DLCX is replicable for U.S. institutional investors.
In the chart you can see that only litecoin (LTC, -2.23%), which had an extraordinary run in the fourth quarter, managed to keep pace with bitcoin.
4. Cryptocurrency Fund Flows Decline as Bitcoin Price Trades Sideways
Crypto fund flows are slowing, which could suggest investor uncertainty about BTC’s price.
Cryptocurrency fund inflows declined by roughly 58% to $99 million last week. Lower investor appetite for digital asset funds could reflect uncertainty over bitcoin’s price, which recently has traded in a range between $53,000 and $61,000.
“Since the February price highs and heightened volatility, we have seen a steady decline in appetite amongst investors,” according to a report by CoinShares, a digital asset management firm.
“We have also seen a decline in bitcoin investment product trading volumes to $713 million per day last week, versus $1.1 billion per day for 2021,” wrote CoinShares.
Fund flow data also shows a regional divide. Inflows are slowing in the U.S., while Europe and Canada have sustained investor appetite.
Bitcoin (BTC) products received a majority of inflows last week, while ethereum (ETH) and polkadot (DOT) lagged behind.
5. Korean Government Approves Crypto AML Rule Set to Come Online Thursday
Crypto companies have until September to register with financial regulators.
South Korea’s anti-money laundering safeguards for cryptocurrency businesses will come into effect Thursday after cabinet officials approved a series of amendments last week, according to the Financial Services Commission (FSC).
Registered Virtual Asset Service Providers (VASPs) must file suspicious transaction reports with the FSC, subject themselves to compliance inspections and verify their customers’ identities beginning March 25.
Crypto firms engaging in custody, trading, sales, exchange and digital wallet services have a six-month grace period to register with the FSC before facing potential sanctions for non-compliance beginning in late September, FSC said.
FSC first called for crypto-focused updates to the country’s AML framework in November 2020 in an attempt to get on track with the Financial Action Task Force’s crypto oversight regime.
South Korea’s National Assembly voted in favor of the update on March 5. Cabinet officials gave the law the green light on March 17.
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March 23, 2021