Market update
You might have assumed three crypto-linked banks collapsing and the government taking aim at crypto mining would put downward pressure on markets, but you’d be wrong. So is it really ‘long Bitcoin, short the bankers’ as economist Alex Kruger tweeted today, alongside a graph of bank stock prices plunging by double digits and Bitcoin surging? As usual, nobody is 100% sure, and there are a lot of moving parts: traditional markets now expect interest rate hikes to be lower to avoid putting more pressure on the banking system. USDC’s wobbles this week have woken Bitcoiners up to the fact it might not be a safe place to park money and some investors have been converting to BTC.
Investors seemed a little ambivalent this week, with Glassnode data showing that US$3.9 billion (A$5.78B) of Bitcoin flowed into exchanges over the past week… while US$3.8 billion (A$5.64B) flowed out. The macro picture was complicated by the release of a US Department of Commerce report indicating that the personal consumption expenditure price index rose 0.6% in January. Bitcoin finishes the week down 5.4% to trade around A$34,690 (US$23,385), while Ethereum was down 4.2% on the same time last week at A$2,410 (US$1,624). Ripple fell 4.9%, Cardano was down 10.2%, Dogecoin lost 7.9%, and Solana fell 13.5%, after the network was halted for the tenth time. The Crypto Fear and Greed Index is at 50 or Neutral.
Amid the great crypto crackdown in the US, Bitcoin spiked above US$25K (A$36.2K) this week. Various theories have been advanced about why the price is up when the news is bad: They include the return of the ‘China narrative’ as Hong Kong warms up to crypto, improving macro conditions, an influx of money from big funds , and a hypothesis that users who are unable to redeem Binance-issued BUSD for dollars (after it was declared a security by the SEC) have been dumping it into Bitcoin and Ether. At the time of writing, Bitcoin had recorded a 14.4% gain on a week ago to trade at A$35,810 (US$24.8K), while Ether was up 13.8% to A$2,455 (US$1,700). Everything else was up, including Ripple (6.9%), Cardano (12.5%), Polygon (24.6%) and Dogecoin (7.1%). The Crypto Fear and Greed Index is at 58 or Greed.
Regulatory action in the US took centre stage this week, with Bitcoin falling 4.1% to A$31,260 (US$21,755). Ethereum dropped 7.1% to A$2,150 (US$1,500). Despite the crackdown the big market mover is likely to be the imminent release of inflation figures in the US, with anything indicating an increase likely to weigh heavily on prices. XRP lost 5.1%, Cardano was down 6.1% and Dogecoin lost 8.1%. The Crypto Fear And Greed Index is at 48 or Neutral.
Crypto markets saw a boost earlier in the week after the US Federal Reserve raised rates by the expected quarter of a percent and officials started to talk about “disinflation”. Bitcoin poked its head above US$24K (A$34.6K) while ether traded above US$1,700 (A$2,450) for the first time since September. However, the good vibes came to a halt after unexpectedly strong job numbers on Friday raised fears that rates will continue to rise. Nonfarm payroll jobs jumped 517,000 in January, much higher than the 185,000 predicted and US unemployment is now at its lowest level since 1969. Closer to home the Reserve Bank is expected to raise interest rates again today. Bitcoin finishes the week down 4.1% to trade at A$32,760 (US$22,755) while ether was down 1% to A$2,333 (US$1,620). XRP lost 3.5%, Cardano was relatively flat, Doge gained 2.6% and Polygon was also up, by 2.2%. The Crypto Fear and Greed Index is at 56 and has been at ‘greed’ for the past week.