Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.

James Rubin is CoinDesk's U.S. news editor based on the West Coast.

Good morning. Here’s what’s happening:

Prices: Bitcoin holds above $41,000, even after hawkish comments from the chair of the U.S. central bank.

Insights: Bitcoin started the week slowly in Asia, and some investors may be placing their bets on DeFi.

Technician's take: Bitcoin's pullbacks could be limited over the short term.

Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis. And sign up for First Mover, our daily newsletter putting the latest moves in crypto markets in context.

Prices

Bitcoin (BTC): $41,242 +0.1%

Ether (ETH): $2,918 +2%

Top Gainers

Asset Ticker Returns Sector
Algorand ALGO +8.9% Smart Contract Platform
EOS EOS +6.8% Smart Contract Platform
XRP XRP +4.1% Currency

Top Losers

Asset Ticker Returns Sector
Ethereum Classic ETC −2.4% Smart Contract Platform
Polygon MATIC −1.0% Smart Contract Platform
Solana SOL −0.2% Smart Contract Platform

Markets

S&P 500: 4,461 -1.9%

DJIA: 34,552 -0.5%

Nasdaq: 13,838 -0.4%

Gold: $1,935 +0.8%

Ether gains as bitcoin holds

Bitcoin (BTC) stood roughly where it did 24 hours ago, a little over $41,000, after a brief dip below this threshold following hawkish monetary policy comments from U.S. central bank Chair Jerome Powell.

Ether (ETH), the second-largest crypto by market cap after bitcoin, was changing hands at about $2,900, up over 2%. Other major cryptos were mixed. Trading volume was light as investors take stock of fast-moving, global macroeconomic trends. Bitcoin peaked at over $42,000 last week, buoyed by China's commitment to support its flailing real estate and technology sectors.

Major stock indexes retrenched after Powell said in a speech at the National Association for Business Economics annual conference in Washington D.C. that the Federal Reserve might raise interest in 50-basis-point increments to tame inflation, which has been plaguing the U.S. economy, and threatens to worsen amid fall-out from Russia's intensifying attacks on Ukraine. On Monday, Russian forces bombed a mall in the capital city of Kyiv, continuing its target of civilian locations, and U.S. President Joe Biden warned that Russia might launch cyberattacks on major U.S. companies in retaliation for severe economic sanctions.

The price of Brent crude oil, a widely watched measure of the energy market, rose 7% to $112 per barrel. Russia is one of the world's leading suppliers of oil.

Katie Stockton, founder and Managing Partner of Fairlead Strategies, told CoinDesk TV's "First Mover" program that the low trading volumes were "very normal in a sideways trending market."

"Think about it as a tug of war between buyers and sellers and a period of indecisiveness," she said. "I think that indecisiveness is reflecting itself in the lighter volumes, the less decisive trendy moves. "Then it just becomes a question as to whether that consolidation phase reconciles to the upside or the downside."

She added: "We do think it will be reconciled to the upside with our short-term bullish bias. We see it as a function of that, and we would expect with any kind of breakout, let's say above $45,000, we would expect volumes to come back into the market."

Insights

Bitcoin starts slowly in Asia

Bitcoin started the trading week in Asia slowly, spending most of the day hovering around the $41,000 point, according to data from CoinDesk Indices.

But that’s bitcoin’s problem. But Layer 1 protocols like Avalanche rose 32% last week, while liquidity protocol Aave hit 34% in weekly gains and Ethereum pushed through 15% on the week.

Data from Glassnode reflects this.

CoinDesk - Unknown

BTC active address, price, long-term holders (Glassnode)

The number of active addresses on the network are at a monthly low while long-term HODLers are at a yearly high. Likely there’s a lot of bitcoin parked to get liquidity on better-performing assets.

Interest rates on bitcoin margin loans – used to trade the cryptocurrency on exchanges with extra leverage – are effectively flat, indicating an oversupply in the market. Bitfinex isn’t currently charging a fee for the loans, and Poloniex charges only 0.4%.

CoinDesk - Unknown

(Cryptolend.net)

And where is all this bitcoin going? Likely into decentralized finance (DeFi). The Bored Ape Yacht Club-linked ApeCoin (APE) seemed to be the most exciting new thing on the blockchain, jumping over 10% during the day. As CoinDesk reported, APE covered calls were hitting a 42% projected annualized yield.

There are also staking possibilities. With the launch of Eth 2.0 soon to occur, traders are becoming increasingly bullish on ether with projected yields hitting 10% to 15%.

But remember, that all this isn’t necessarily a bad thing for bitcoin. Bitcoin’s volatility index was at a monthly low and approaching a yearly low as the market stabilized after the Fed raised rates as expected. All this helps the narrative of bitcoin as a store of value, not something that reacts violently to market gyrations as we saw last year. More bitcoin held with confidence for the long term is more liquidity available for DeFi.

Technician's take

CoinDesk - Unknown

Bitcoin four-hour price chart shows support/resistance, with RSI on bottom. (Damanick Dantes/CoinDesk, TradingView)

Bitcoin (BTC) is consolidating around the $41,000 price level amid declining trading volume.

The cryptocurrency is roughly flat over the past 24 hours, and pullbacks could be limited toward a strong support base at $37,000.

Further, the relative strength index (RSI) on the four-hour chart is declining from overbought levels, which reflects a loss of upside momentum. On the daily chart, the RSI is holding above the 50 neutral mark, which means buyers could remain active at lower support levels.

On the weekly chart, technical indicators are improving, similar to what occurred in August 2021, which preceded a 60% price rally. This time, however, there is negative momentum on the monthly chart, which typically precedes rangebound or negative price action. That means upside could be limited around the $46,000-$50,000 resistance zone.

Important events

9 a.m. HKT/SGT (1 a.m. UTC): Speech by Australia central bank Governor Philip Lowe

3 p.m. HKT/SGT (7 a.m. UTC): U.K. public sector net borrowing (Feb.)

CoinDesk TV

In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:

Stellar Development Foundation CEO Denelle Dixon joined "First Mover" to discuss Ukraine's central bank digital currency (CBDC) project, and plan for Stellar's latest $30 million push to fund startups. Plus, Katie Stockton of Fairlead Strategies provided crypto mining insights and CoinDesk mining reporter Aoyon Ashraf looked at the state of the global mining industry as CoinDesk kicked off its Mining Week series.

Headlines

Naomi Osaka Becomes Latest FTX 'Ambassador,' Joining Tom Brady and More: The tennis star gets shares in the global crypto exchange as part of the deal.

Abu Dhabi Free Zone Seeks Comments on NFT Rules: A consultation paper is looking to bring NFTs into the emirate's regulatory framework for virtual assets.

Crypto Funds Suffer Second Straight Week of Outflows: Investors continue to be daunted by the uncertain market and economic environment.

Traders Bet on Ether Staking After Ethereum 2.0 Upgrade: Ether staking yields are likely to be in the range of 10% to 15% following the Ethereum 2.0 upgrade, one trader said.

BofA Initiates Coverage of Silvergate With ‘Buy’ Rating, Sees 50% Potential Upside: The crypto bank is one of the best positioned companies to benefit from the expanding use of stablecoins, the report said.

Longer reads

What Is ApeCoin and Who Is Behind It?: A carefully coordinated marketing campaign takes great pains to distance the new token from Yuga Labs, but the firm that created the Bored Ape NFTs appears to be deeply involved.

Other voices: What Is Web 3? (The New York Times)

Said and heard

Several years ago, people realized that blockchains (the shared, decentralized databases that power bitcoin and other cryptocurrencies) could be used to create unique, uncopyable digital files. And because these files were simply entries on a public database, anyone could verify who owned them, or track them as they changed hands. That realization prompted the creation of the first NFTs. (The New York Times) ... "But DAOs may themselves be in for a change that could fix perhaps their most significant vulnerability. The current DAO model is human-run, and as a result, DAO decisions are prone to errors in judgment. The use of artificial intelligence, another transformative technology, would eliminate those mistakes and make DAOs even more effective." (SingularityDAO CEO Marcello Mari) ... "Millions of users now have blockchain wallets and accounts. They have stablecoins and cryptocurrencies and access to digital contracts. They represent a ready market of investors and buyers with a demonstrated willingness to try new things. And that may, in turn, become more important than using blockchain technology for use cases that are ideally decentralized." (EY Blockchain Lead and CoinDesk columnist Paul Brody)


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Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.

CoinDesk - Unknown

James Rubin is CoinDesk's U.S. news editor based on the West Coast.

CoinDesk - Unknown

Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.

CoinDesk - Unknown

James Rubin is CoinDesk's U.S. news editor based on the West Coast.