Where is Bitcoin Moving Next?
Bitcoin broke all-time highs this week, surpassing the Swiss Franc to become the 13th largest currency. But its burst of good fortune that took it just short of $74k was retraced, ending the week down slightly. What stood out about this week’s price action, and should you be buying the dip?
While Bitcoin expeditiously rejected off new all-time highs both times they were set last week, Monday marked the first time this cycle that BTC had been able to trade higher after cracking all-time highs, a feat that has not been achieved since November 2021!
BTC retested last cycle’s all-time high twice during the week, first on Tuesday and then again on Thursday, before breaking below a key level on Thursday night and resting below $70k for most of Friday through the time this piece was published.
Funding rates on perpetual swaps have cooled to their healthiest level in two weeks with the recent pullbacks in crypto asset prices, but aggregate onchain yields remain at their highest levels since March 2022, signaling that borrowing has reached extreme levels and indicating market participants may be over-levered.
Despite Ethereum’s Dencun upgrade slashing fees across the ecosystem’s most popular L2s this week by orders of magnitude, we have yet to see an improvement in token prices, with OP, ARB, and MATIC all bleeding to ETH on the week.
Many on Crypto Twitter got bullish on ETH during the middle of last week after ETH/BTC appeared to break out from the downturn that has plagued holders since September 2022, but gains for ETH proved to be fleeting into this week, and the ratio slipped back below the trend line.
Contributing towards the decline is increasing pessimism on the probability of spot ETF approval from market participants, highlighted by plunging odds from Bloomberg’s Senior ETF Analyst and bettors on prediction markets.
Yeah our odds of eth ETF approval by May deadline are down to 35%. I get all the reasons they SHOULD approve it (and we personally believe they should) but all the signs/sources that were making us bullish 2.5mo out for btc spot are not there this time. Note: 35% isn't 0%, still… https://t.co/QWQOGZjDC5
— Eric Balchunas (@EricBalchunas) March 11, 2024
For those keen to capitalize on the recent dip and seemingly healthier market conditions with longs, the most promising investment opportunities appear to be presenting themselves in the Solana ecosystem.
SOL was one of the strongest performing crypto assets throughout last week and one of the few to set a higher cycle high on Friday as broader crypto markets turned lower, with the strength reflected by the ecosystem’s bluechips and memecoins alike!
Jack Inabinet