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| By Alex Benfield |
With all the craziness going on in the world, I can’t be the only one who gets a little depressed every time I open my Twitter feed or turn on the news lately.
There has been an onslaught of regulatory action against cryptos …
Instability caused by the ongoing banking crisis …
Recent actions China and Russia have taken against the petrodollar …
And a bit of good old-fashioned American political drama.
However, despite the barrage of bad news regarding the crypto industry recently, prices have remained relatively stable.
The crypto market kicked off 2023 red-hot, as the bulls awakened from their year-long slumber. Prices shot up in January as the market finally digested the FTX meltdown and its aftershocks.
February was a mostly sideways month. Then, in the beginning of March, the market dropped to retest support levels. But support held, and in mid-March, crypto prices shot up to new yearly highs.
In the three weeks since, levels have remained steady, seemingly unphased by the outside world and its negativity.
This is a pretty impressive show of resiliency.
Better yet, Ethereum (ETH, “B”) has bounced up to post new yearly highs over the past 48 hours, breaking the $1,900 level for the first time since August 2022.
We will have to see if ETH can hold these levels, but it may have just broken above its recent trading range that was capped at $1,850. This is still small progress, but perhaps that is all we can hope for given the current market conditions.
The next big resistance level is $2,000, which is the level that most market spectators are looking out for right now.
One reason why Ethereum is making gains this week could be the upcoming Shanghai network upgrade. The upgrade will allow for the unstaking of ETH, a feature that has not been available since the rollout of ETH 2.0.
While there is some debate as to whether that move is bullish, I personally have sat out from staking ETH in the past due to the uncertainty around unstaking. This new upgrade alleviates that worry for me, and I believe it will do the same for other investors.
While Bitcoin (BTC, “A-”) has not made similar gains over the last two days, it has held up extremely well over the past three weeks.
BTC is currently trading around $28,000 and has been since mid-March. While $27,000 should offer a small amount of support, BTC’s 200-week moving average would likely be the first true target for the bears if prices turn south.
Otherwise, $30,000 is the next clear target for the bulls and would mark a significant turning point in the market.
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Since Bitcoin has been outgaining the entire crypto market for months now, it is not too unexpected to see ETH and some other altcoins make up some of that lost ground this week.
Over the next few months, Bitcoin’s strong market dominance will be something to keep an eye on. Until that cools down, it will be difficult for the altcoin market to sustain any long-term gains.
What’s Next
One thing is for certain: Most major cryptocurrencies are clearly trending up so far in 2023.
This could be explained by a decline in the U.S. Dollar Index — which is down about 4% so far this year and about 12% since its September high — or it could be a reaction to the weakening banking system.
Regardless of the reason, I can’t overstate how impressive it is to see Bitcoin and the overall crypto market hold up this well despite the most aggressive series of regulatory enforcement actions in crypto history.
If Bitcoin can tread water and trade sideways during this much negativity and bad news, imagine what might happen when things cool down.
While the bear market of 2022 appears to be over, we are certainly not in a bull market just yet.
However, the resiliency shown by the crypto market this year gives me hope that the next bull market will be just as exciting and explosive as the last few.
Best,
Alex
