Good morning, and welcome to First Mover, our daily newsletter putting the latest moves in crypto markets in context. Sign up here to get it in your inbox each weekday morning.
Here’s what’s happening this morning:
- Market Moves: Analysts maintain a constructive outlook on bitcoin amid the cryptocurrency's triangular consolidation under the 200-day average. Calm in credit markets suggests Fed's liquidity tightening isn't as severe as widely feared.
- Chartist Corner: Bitcoin forms a pennant.
- Cory Klippsten, CEO, Swan Bitcoin
- Andrew Wagner, co-founder, BlockRaiders Guild
- Marina Niforos, affiliate professor, HEC Paris
By Omkar Godbole
Bitcoin's bullish momentum has weakened in the past eight days. The cryptocurrency is consolidating in a narrowing price range under its 200-day moving average of above $48,000.
Yet market observers remain confident that the sideways move will pave the way for more substantial gains.
"The liquidation signals have reversed from February and March and show triggering of buy orders daily," Laurent Kssis, managing director and head of Europe at crypto exchange-traded fund firm Hashdex, told CoinDesk in a Telegram chat. "Steady on-chain activity suggests limited downside risk. This hints that the next big move is likely to be positive, provided there is a sustained improvement on-chain driven by continued institutional investor demand."
Investor demand has held up well despite bitcoin's stalled ascent. Digital-asset funds drew $180 million in the seven days through April 1, marking a second straight week of net inflows, according to a CoinShares report published Monday.
According to Glassnode, institutional investors have been allocating funds to bitcoin, ethereum and altcoins despite the fragile macro environment.
And while bitcoin has taken a back seat to other cryptocurrencies in recent days, as evidenced by the decline in the BTC dominance index, there is little reason to worry for bulls, according to Matthew Dibb, CEO and a co-founder of Stack Funds.
"Flows over the last few days have been lighter, with more action in altcoins, particularly layer 1 coins and DeFi (decentralized finance)," Dibb said. "We don't see any cause for panic or significant reason for a bearish retracement. While there is some macro uncertainty regarding Fed and Russia, BTC has performed relatively well and is beginning to garner more support."
Meanwhile, credit markets remain calm despite a max-hawkish Federal Reserve, indicating liquidity tightening isn't as severe as widely feared. That perhaps explains the prevalent bullish mood in bitcoin and stocks.
"I think it's just a sign that the liquidity contraction has not lived up to the Fed's expectations. In addition, there is underlying solid buying in the Asian region, as China and Japan generally have rate cuts," Griffin Ardern, a volatility trader from crypto-asset management company Blofin, said. "That said, the liquidity contraction did not happen globally simultaneously, and we can still find some liquidity pumps."
The stability in the credit markets, however, may encourage the Fed to take aggressive steps should inflation continue to rise. "If the upcoming monthly consumer price index data are not good, the Fed may take aggressive measures, which will cause significant fluctuations," Ardern said.
The CPI for March is due next week. Ardern also cited the minutes of the March Fed meeting and the upcoming European Central Bank meeting as critical events to watch out for. "The Fed minutes could provide some relevant information on the road map for shrinking the balance sheet," he said.
Bitcoin Forms a Pennant
By Omkar Godbole
Bitcoin's recent consolidation has taken the shape of a bull pennant, identified by converging trendlines, representing a narrowing price range after a notable move higher.
A breakout would imply a continuation of the rally, while a breakdown could invite chart-driven selling pressure, perhaps yielding a pullback to $40,000.
Today’s newsletter was edited by Omkar Godbole and produced by Parikshit Mishra and Stephen Alpher.
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