$BTC pulls back as bulls sitting tight on the sidelines

​​$BTC 24 Hour High $42,053 / Low $38,523   |   $BTC -6.0% Past 24 hours; -7.5% Past 7 days

Good morning and happy Friday. The digital assets market erased this week’s gains as the Ukraine-Russia talks failed to make any progress. In addition, the U.S. inflation rate hit another 40-year high of 7.9%, driven by surging costs for food, gas and housing. Despite these unfavorable factors, major altcoins experienced less selling pressure than $BTC, which saw a 6% dip over the past 24 hours.

$BTC’s plunge to $38,523 may also be partly due to the “anticipated” pullback after the sharp rally from Wednesday. While $BTC is finding support at the 0.618 Fibonacci retracement level around $39,000, most bulls are still on the sidelines waiting for clearer market signals in a possible direction. Since market sentiment switches from one day to the next, it is rather challenging for investors to trade under these trading conditions. At present, RSI is rather neutral, and volatility is in decline. It seems that prices are coiling up for a big move, but this could take until April before playing out. Currently, Bitcoin’s dominance is the only chart that’s really showing bullish actions as it pushes higher into the mid-40%.

$ETH is settling in at the 0.5 Fibonacci retracement level from the current impulsive move. Like $BTC, the No. 2 digital asset will likely trade sideways unless we either break above $3,050 or below $2,150. Until then, the price compression around this level may persist. Other factors that may halt this situation include $BTC offering a clearer direction, or risk-on behavior returning to the equity markets – crypto’s correlation to the equity markets is still very high at this moment. Besides, some altcoins are finding themselves in the textbook definition of a bear market; for instance, $LINK, $GRT, $OGN are all seeing continued outflows of capital and price suppression as the rotation into $BTC persists.

With the much-anticipated upgrade to the Consensus Layer (formerly known as Ethereum 2.0), believers of the switch from Proof-of-Work to Proof-of-Stake mechanism pumped in more than 10 million ETH, with a current value of more than $25 billion into the network’s staking contract. As the second-largest cryptocurrency by market cap, $ETH is swapping miners for validators and this 10 million $ETH lock up in the deposit contract will provide crucial support for the upcoming network upgrade. Validators have an economic incentive as staking rewards currently stand at 4.81%, and if they process fraudulent transactions to pass, a monetary penalty will be imposed. Other Layer 1 networks do provide better staking returns at the moment, with Terra and Solana offering 6.07% and 5.72%, respectively. 

Learn more from today’s Trader View video

Digital Assets Market

  • Total crypto market capitalization stands at $1.83T, -4.6% from yesterday
  • $BTC is -0.4% at time of writing; 24H liquidations and funding rates: 88.15M, -0.00179% average
  • $ETH is -0.4% at time of writing; 24H liquidations and funding rates: 42.02M, -0.00121% average
  • Stablecoins market dominance: USDT 43.34%; USDC 28.44%; BUSD 9.74%; UST 7.78%; DAI 5.07%

Alts and DeFi watch:

  • DeFi TVL: $200.64B (+1.78% over last 24h)
  • $SOL -6.0% in the last 24 hours, -13.4% in the past week
  • $SHIB -5.2% in the last 24 hours, -10.1% in the past week
  • $SAND -4.6% in the last 24 hours, -10.3% in the past week
  • $ENJ -4.5% in the last 24 hours, -10.2% in the past week

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OSL Trader View is contributed by Stefan von Haenisch & Ethan Fu.

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