Bitcoin hangs at $24,000 level after Wall Street’s worst day of 2023 so far
Bitcoin, the world’s largest cryptocurrency by market capitalization, rose 0.48% in the week from February 17 to February 24, trading at $23,932 at 8:30 p.m. Friday in Hong Kong. Ether fell 1.04% over the same period to change hands at $1,648.
Despite Wall Street posting its worst performance of the year on Tuesday, Bitcoin remained resilient, briefly falling below the $24,000 price level the next day before rallying back.
“The fact that Bitcoin remained resilient during Wall Street’s biggest losses of the year and even recovered from a brief dip below the $24,000 mark suggests that Bitcoin’s correlation to US stock markets is not very strong. In fact, Bitcoin’s correlation to the S&P 500 is at the lowest since late 2021, according to data from Dylan LeClair, senior analyst at digital asset fund UTXO Management, on Twitter. However, the two assets remain positively correlated,” Jonas Betz, a Germany-based cryptoanalyst, wrote in a LinkedIn response to Discard.
Kasper Vandeloock, CEO of the quantitative trading firm Musca Capital, told Discard that there is still “a strong correlation” between the Nasdaq and the crypto market and that investors are looking for fiat alternatives.
“People are fleeing to Bitcoin as trust in fiat currencies and traditional systems is declining. Banks in Lebanon are being set on fire because of cash withdrawal limits. The value of currencies has fallen a lot, people are looking for alternatives,” Vandeloock said.
Karlen Danielian, founder and CEO of play-and-earn metaverse 2040world, said Bitcoin is highly correlated with the US stock market, particularly the S&P 500.
“Recently, Bitcoin has shown strength compared to the stock market. There is a theory that this is due to expectations of the development of the cryptocurrency market in China via Hong Kong. I believe that Chinese money can greatly help the growth of the cryptocurrency market, and especially Bitcoin, in the coming the years,” wrote Danielian Discard.
US jobless claims fell by 3,000 last week to 192,000, according to data released by the Labor Department on Thursday, lower than the 200,000 forecast by economists polled by Reuters. The tight labor market could have prompted the US Federal Reserve to continue raising interest rates.
The global crypto market capitalization stood at $1.09 trillion on Friday at 8:30 p.m. in Hong Kong, the same value as a week ago, according to CoinMarketCap data. Bitcoin’s market cap of US$461 billion represented 42.2% of the market, while Ether’s US$201 billion accounted for 18.5 percent.
See related article: Industry reacts: US cracks down on crypto, India calls for regulatory cooperation
Biggest gains: STX and CFX
STX, the original token of the Stacks Network, was this week’s biggest winner among the top 100 coins by market capitalization listed on CoinMarketCap. STX was up 133% on the weekly chart to trade at $0.75 at 8.30pm in Hong Kong.
Stacks is a Bitcoin layer-2 that allows developers to deploy smart contracts, bringing decentralized applications such as NFTs to the network. The STX token started its rally on February 19, fueled by renewed interest in Bitcoin-native NFTs following the launch of Bitcoin Ordinals, a protocol that allows users to enter data in satoshis, the lowest denomination of Bitcoin.
Ordinals Inscriptions passed 154,000 on February 21, adding more fuel to the STX rally.
“BTC now has an additional use case other than just being a currency. BTC is now a place where NFTs or “digital artifacts” can be created and stored on every single node on the BTC network. The added benefit of having a bottom solid use case of NFTs added to BTC will influence miner fees to increase as demand for network resources increases,” Yohann Calpu, head of marketing at NFT data aggregator CryptoSlam, wrote to Discard.
Betz said Bitcoin Ordinals have an immutability advantage over traditional NFTs.
“Ordinals have an immutability advantage over traditional NFTs as ordinals allow users to store all data directly and permanently on the Bitcoin blockchain. Proof-of-stake-based NFTs, on the other hand, often require off-chain data storage and can be changed by using metadata,” Betz wrote.
Conflux’s native token (CFX) was this week’s second biggest gainer among the top 100 coins. Conflux Network is an interoperability-focused protocol and the only public, permissionless blockchain with regulatory compliance in China.
CFX was up 84.54% on the weekly chart, changing hands at $0.27. The token started its rally on January 26, after news of Conflux partnering Little Red Book, a Chinese social media platform, which enables over 200 million users to create their profile pictures as NFTs on Conflux.
Next week?
“The current support level is in the $23,375-$23,600 range as this marks the declines in the retracement of Bitcoin’s failed attempt to break through $25,000,” wrote cryptoanalyst Betz.
“The most important resistance that Bitcoin needs to overcome is the psychological mark of USD 25,000. Unfortunately, Bitcoin has failed to break through this resistance three times in the last 7 days. This again means that a future breakout is even more significant and could be met with great euphoria,” he wrote, adding that he expects “a breakout and subsequent fall of Bitcoin to between $21,000 and $22,500,” due to Bitcoin’s previous attempt to breach US$25,000 and the Fed’s signals of to raise interest rates further.
Aziz Kenjaev, Head of Partnerships at decentralized crypto derivatives exchange GammaX, also expects a downward trend next week, with Bitcoin heading towards USD 21,500-22,300.
“According to the technical outlook, Bitcoin bounced back from the important dynamic resistance at USD 25,266, this level was retested and created a strong static resistance, and therefore buyers’ pressure is weakening. If bears can push BTC below USD 23,500, it will most likely fall to USD 21,500-22,300,” Kenjaev wrote.
“As the regulatory provisions for the crypto market are set to pick up pace this year, following the FTX collapse, we may also see watchdogs reporting concerns over several crypto projects. In addition, the FSB (Financial Stability Board) will issue a report on findings in their cryptocurrency and stablecoin research in cooperation with the International Monetary Fund This could lead to uncertainty in the market, Kenjaev added.
Danielian said that USD 25,000 is a key price level for Bitcoin: “It is crucial for Bitcoin to break through and establish itself above the USD 25,000 level, and then we can say that the market has turned from bearish to bullish.”
Vandeloock said there is a big focus on Asian and Chinese coins right now, which he expects will shift back to AI coins, adding that “AI projects like 0xAI have gotten massive attention.”
See related article: Be careful what you wish for? Regulators are picking up the pace in the crypto industry
