Liquidity sweep spooks the market

$BTC 24 Hour High $41,280 / Low $38,534  |   $BTC +3.2% Past 24 hours; +3.5% Past 7 days

Good morning. Over the last 24 hours, major digital assets traded sidelines with muted volumes due to tax-related selling pressure, growing regulatory concerns, and geopolitical conflicts in Ukraine. Sidelines trading could remain as these uncertainties continue to linger. We might see a short-term rally in major cryptos, but it’s unlikely to be unsustainable. Meanwhile, Terra’s UST flipped BUSD to become the third-largest stablecoin in the world.

Yesterday, $BTC dropped to a five-week low below $38,000 briefly before closing in the green at $40,800 after an aggressive rally. If the bulls can persistently push the prices up, $BTC may test $41,600. However, we will likely encounter resistance at the 111D MA, so $42,500 is probably the highest point that the current bullish price action can $BTC hit in the near term.

In our opinion, a sustained rally at this stage seems unlikely as the trading range of the No. 1 digital asset lies between $41,600 and $39,300. Market views remain neutral, with longs and shorts equally leveraged, as shown by the neutral funding rates across major retail crypto exchanges. $BTC has also received some price support from the equity markets, which started the week on a stronger footing. Another positive sign to keep an eye on is the Grayscale Bitcoin Trust (GBTC) share discount rate. The discount rate has been decreasing steadily since mid-March, implying that institutional demand is returning for this product. 

$ETH pared losses as well, dipping below $3,000. The funding rates remain firmly negative, and the current market is much more aggressive among shorts. There is a likelihood for $ETH to chart higher to retest $3,275 in the short term, but we would expect to run out of steam here before a trend reversal takes place. Instead, the No. 2 digital asset may grind lower towards $2,621 over the coming month. Yet, we can dismiss this thesis altogether should $ETH push higher towards the local top from April 4 at $3,580.

Yearn.Finance founder and former FTM solutions architect Andre Cronje called for regulation over the DeFi ecosystem. His latest essay on social media talks about two opposites –  the crypto ethos concept is all about self-custody, self-sovereignty, and self-empowerment. The other opposite is that crypto culture hinges upon entitlement, enrichment, wealth, and ego. He believed this culture was strangling the ethos and called for a start of a new chapter for digital assets and blockchain to be driven by trust instead of trustlessness.

Learn more from today’s Trader View video

Digital Assets Market

  • Total crypto market capitalization stands at $1.99T, +0.8% from yesterday
  • $BTC is +0.04% at time of writing; 24H liquidations and funding rates: 97.67M, +0.00189% average
  • $ETH is +0.59% at time of writing; 24H liquidations and funding rates: 69.53M, +0.00944% average 
  • Stablecoins market dominance: USDT 44.30%; USDC 26.68%; UST 9.43%; BUSD 9.30%; DAI 4.67%

Alts and DeFi watch:

  • DeFi TVL: $212.47B (+0.32% over last 24h)
  • $SOL +2.2% in the last 24 hours, +3.6% in the past week
  • $SHIB +2.2% in the last 24 hours, +14.6% in the past week
  • $SAND +2.7% in the last 24 hours, +3.3% in the past week
  • $ENJ +2.4% in the last 24 hours, -2.6% in the past week

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OSL Trader View is contributed by Hans-Stefan Vonhaenisch & Ethan Fu.

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