Bitcoin, Ethereum Struggle for Direction

The crypto market seems to have found a floor, for now at least. Most cryptocurrencies are in the green today as the market has bounced off of yesterday’s lows.

•  Bitcoin (BTC, Tech/Adoption Grade “A-”) is up 3% today, having held off the bears for now.

•  Filecoin (FIL) is up 20% on the day, continuing its amazing year.

•  THORChain (RUNE) is also up big today on big news about its tech.

After briefly testing $50,000 yesterday, Bitcoin has bounced back up to about $53,000 on a roughly 3% daily gain. Since Satoshi Nakamoto’s creation lost ground this week, its market capitalization has fallen back below $1 trillion.

The King of Crypto has struggled since falling below its 21-day moving average. Though this is a step in the right direction, BTC is not out of the woods yet.

Right now, BTC is in a sort of no man's land between the strong support of $50,000 and the previous support of $57,000. One of those levels is likely to give at some point, and we’ll know the short-term direction at that point.

Here’s BTC in U.S. dollar terms via Coinbase:

Filecoin has continued its spectacular run today, rising 20% to trade around $110. FIL had dropped to a low of just $73 only four days ago, but that retracement was just a mere speedbump on its exciting ride.

FIL started February around $22, meaning it’s essentially quintupled in less than two months. Talk about red hot. 

Here’s FIL in U.S. dollar terms via Coinbase:

THORChain is an exciting interoperability project that was created in 2018. It’s been on a scorching tear all year long. And an announcement today from the team suggests THORChain’s multichain tech is close to finished.

RUNE started the year trading around $1.25 before rallying to a high of $7.00 on March 11. It cooled off, slipping to a low near $4.50 earlier this week.

A 20% gain today has it right back at its 21-day moving average of $5.60. If RUNE can clear that key metric and cross back above $6.00, we might see it re-enter price-discovery mode once again.

Here’s RUNE in U.S. dollar terms via Binance:

Here’s my colleague Sam Blumenfeld with the weekly breakdown of the Weiss Crypto Indexes …

It was a slow week for the cryptocurrency market, as the most established names struggled to maintain momentum. We’re still seeing outflows into less established altcoins as investors chase greater profits, as you’d expect during altcoin season.

Bitcoin hovers around $53,000 as of this writing, and Ethereum is struggling to break out above the $1,600 range. We’ll continue to keep a close eye on the two largest cryptocurrencies, and we’ll see if they can sustain their growth trajectory despite downward pressure from their trading pairs. 

The Weiss 50 Crypto Index (W50) fell 5.93% this week, as the broader market cooled down.

The Weiss 50 Ex-BTC Index (W50X ) shed 3.42%, showing the broader market performed slightly better than the King of Crypto.

Breaking down this week’s performance by market capitalization, we see that smaller altcoins outperformed larger- and mid-sized cryptocurrencies.

The largest cryptocurrencies struggled relative to the broader market, as the Weiss Large-Cap Crypto Index (WLC) dropped 6.20%.

Mid-cap cryptocurrencies did better than their larger counterparts, but they still lost ground from last week. The Weiss Mid-Cap Crypto Index (WMC) decreased 2.77%.

The small-caps were the sole winners this week, as the Weiss Small-Cap Crypto Index (WSC) gained 4.71%.

The crypto market took a small step back this week, and it will be important to see how it reacts in the short term. Volatility is part of investing in the space, so smaller dips are usually not concerning. 

Regardless, crypto’s long-term bullish trend is intact. Fundamentals continue to improve, and slow but steady institutional adoption will eventually drive the asset class to new heights.

While Bitcoin and Ethereum fell at a slightly higher rate than less-established cryptocurrencies, this makes sense because of the hunt for altcoin outperformance and surge of DeFi investment.

Regardless of short-term volatility, the future looks extremely bright for the crypto market.

Notable News, Notes and Tweets

•  MicroStrategy CEO Michael Saylor responds to Tesla Inc.’s (Nasdaq: TSLA) retention of Bitcoin from purchases and recommends corporate treasuries start holding BTC.

•  Russell Okung, the NFL player who converted half of his salary into Bitcoin, emphasizes the logic behind his investment decision.

•  Ethereum’s upcoming London hardfork promises to bring with it some exciting changes.

What’s Next

The digital currency market has bounced back today, but we’re not in the clear just yet.

It would be nice to see both Bitcoin and Ethereum climb back above their respective 21-day moving averages. In the meantime, it’s a good sign that the market seems to have found support, at least temporarily. 

As shown in the performance of the Weiss Large-Cap Crypto Index, the biggest names are only down about 6% on the week. We say “only” because, in the grand scheme of this crypto thing, 6% is a small move.

These types of corrections are to be expected within larger bullish trends. In fact, the market is still a bit overextended. Trading sideways or even slightly lower for the next few weeks would actually be a sign of a healthy market readying for its next leg up. 

We can’t predict what will happen next. But we can say this is another good opportunity to re-evaluate your investment goals and to prepare for the next phase of this bull market.

The long-term outlook on Bitcoin and cryptocurrency generally is more bullish by the day.

Have a great weekend. We’ll see you on Monday.

Best,

Alex

About the Crypto Analyst

Alex has been actively researching and investing in cryptocurrencies since 2017. He contributes research and reports to several Weiss crypto publications, with a primary focus on helping to create crypto trading strategies.

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