Large-cap crypto assets enjoyed a relief pump last week providing some short-lived solace for bulls following weeks of heavy sell-offs. With traditional markets opening to strong bearish sentiment following a delay in the U.S. federal stimulus package, crypto traders should expect more price volatility in the coming weeks.
Many crypto assets enjoyed a relief pump last week, providing the markets with a much needed reprieve during a period of extreme bearishness driven by the global COVID19 crisis. The price of the top asset on Brave New Coin’s market cap table, BTC, rose 8%. The price of the number two & three assets, ETH and XRP, fell ~2% and ~4%, while the overall market cap for crypto rose ~5% driven by BTC’s strong performance.
Short term prospects for the world economy received a boost last week following a series of announcements related to various monetary and fiscal stimulus programs by governments. A US$1.4 Trillion stimulus package is being proposed in the United States that will include US$1,200 cheques for most adults and billions in financial support for struggling businesses.
News from Washington, however, suggests that negotiations on the US Coronavirus stimulus bill have hit a snag. Democratic Senate minority leader Charles Schumer said over the weekend, “The legislation had many, many problems. At the top of the list, it included a large corporate bailout provision with no protections for workers, and virtually no oversight.”
US stock futures opened to heavy selling on Sunday night leading to a triggered limit down. Wall Street appears pensive while it awaits details on the size of the expected fiscal stimulus program.
The crypto and traditional markets have been surprisingly correlated in recent times. BTC’s price drop on March 12th correlated with historic sell offs in global equity markets as the correlation between BTC and global stock indices touched all time highs. This recent pattern implies BTC’s price performance in coming weeks may be dependent on sentiment in the interconnected legacy/traditional markets. Prices in crypto markets fell concurrently with the Sunday price drops in the global equity/commodity indices.
This week in crypto
March 30th- CME futures trading round settlement
The current round of CME XBT BTCH20 long term contracts ends on March 27th. The nature of futures contracts means they need to be settled on a predefined date, based on a contract. All contracts will have to be traded, or settled, by March 30th. There is generally a fall in the trading volume of futures around expiration, which coincides with a rise in volatility and a potential short/long squeeze. These factors may be heightened by COVID-19 driven market chaos.
It was a mixed trading week for large cap crypto assets with some trading marginally in the red, some trading green, and others joining BTC in enjoying alpha gains. Bitcoin Cash (BCH) enjoyed a boost in fundamental value, following the announcement that popular US dollar stablecoin, Tether, had launched on the Bitcoin Cash network.
BTC’s strong trading week was marred by market wide sell offs on Sunday driven by ongoing COVID-19 related economic, political and financial chaos. These negative macro headwinds threaten to drag the Bitcoin markets down in the months to come. Some technical traders are optimistic of this week’s close, suggesting a number of rising bullish technical indicators.