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Market Wrap: Bitcoin Stuck Below $50K, and Blockchain Data May Show Why

Investors are speculating how a faster-than-expected economic rebound might benefit bitcoin.

Mar 5, 2021 at 9:27 p.m. UTC
Updated Sep 14, 2021 at 12:22 p.m. UTC

Bitcoin ended the first week of March with little fanfare as the market reset after the prior week’s 21% plunge. There are more signs the global economic recovery might come faster than previously expected, and traders are speculating on what that might mean for the largest cryptocurrency.

  • Bitcoin (BTC) trading around $49,196.78 as of 21:00 UTC (4 p.m. ET). Climbing 1.93% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $46,393.39-$49,462.13 (CoinDesk 20)
  • BTC trades above its 10-hour and 50-hour averages on the hourly chart, a bullish signal for market technicians.

Bitcoin trading on Coinbase

This week’s muted price activity in bitcoin showed in the trading volume from eight U.S.-focused exchanges CoinDesk tracks. It has been flat over the past week, roughly a third of levels seen recently.

“Bitcoin is consolidating around $50,000 after rebounding from lows earlier in the week,” Jason Lau, chief operating officer at San Francisco-based crypto exchange OKCoin, said. “Most recently, its price action has been hovering within this range, while open interest in bitcoin futures has also remained consistent.”

$50,000 also appears to be a key short-term resistance level, according to IntoTheBlock’s newsletter Friday, citing a key blockchain data metric In/out of the money around price (IOMAP).

In/Out of the Money Around Price

“A large cluster of addresses (1.46 million) and volume (650,970 BTC) had been bought slightly below $50,000,” IntoTheBlock wrote in the newsletter. “This price range, which already saw high levels of trading activity, is expected to act as strong resistance short-term as investors in this price range may look to break-even on their positions at this point.”

At the same time, another large cluster of addresses and volume, bought in a range of $45,600 to $47,000 currently at the money, are likely to provide strong support, IntoTheBlock’s data shows.

“Ultimately, a break past $45,000 may mean bitcoin will retrace further, while a breakout past $50,000 may suggest it is poised for new highs,” IntoTheBlock added. “These are the levels to watch out for before being certain of the correction being over or not.”

Investors will also have to weigh macro factors including a better-than-expected February job report in the U.S., as well as surging bond yields.

Ether underperforms bitcoin, market watches July hard fork

Ether (ETH), the second-largest cryptocurrency by market capitalization, was up a little on Friday, trading around $1,534.25 and in the green 0.11% in 24 hours as of 21:00 UTC (4:00 p.m. ET).

At press time, ether’s price was down approximately 25% from its all-time high at $2,036.55 on Feb. 19. That’s a steeper drop-off than bitcoin 17% retreat from a record $58,332.36 on Feb. 21.

The main reason ether has been underperforming “is that high ether prices are detrimental to Ethereum's primary use case as a smart contract platform, making transactions extremely costly and resulting in activity moving to other platforms,” said OKCoin’s Lau.

As CoinDesk reported, Ethereum Improvement Proposal (EIP) 1559 is scheduled to take effect in July – regardless of the mining industry’s discontent with the proposal – with the goal of fixing part of Ethereum’s high transaction cost problem.

Other markets

Digital assets on the CoinDesk 20 are mostly in green Friday. Notable winners as of 21:00 UTC (4:00 p.m. ET): 

Notable losers:

Equities:

  • Asia’s Nikkei 225 closed in the red 0.23%.
  • The FTSE 100 in Europe was also lower, 0.31%.
  • The S&P 500 in the United States in the green 1.95%.

Commodities:

  • Oil was up 3.82%. Price per barrel of West Texas Intermediate crude: $66.27.
  • Gold was in the green 0.09% and at $1698.51 as of press time.

Treasurys:

  • The 10-year U.S. Treasury bond yield fell Friday at 1.556%.

COINDESK-20

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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