Bitcoin, the world’s largest cryptocurrency by market capitalization, fell 10.98% in the week from March 3 to March 10, to trade at US$19,941 at 9:00 p.m. on Friday in Hong Kong. Ether slid 10.88% in the same period to US$1,397.
The crypto market saw a turbulent week after New York State Attorney General Letitia James said Ether should be registered as a security in her lawsuit against cryptocurrency exchange Kucoin filed on Thursday, a day after crypto-friendly financial institution Silvergate Capital said it would cease operations and liquidate its banking unit.
Investors digested hawkish comments from Federal Reserve Chair Jerome Powell, who said that the U.S. central bank may continue to raise interest rates this year to combat inflation.
“Bitcoin is still highly dependent on the monetary policy of the U.S. Federal Reserve, and any words hinting an increase or decrease of the key rate can have an effect on its price,” wrote Roman Nekrasov, co-founder of blockchain software firm Encry Foundation, in a LinkedIn response to Forkast.
“The depreciation of Bitcoin should not be unexpected since inflation in the U.S. and the rest of the world has not gone away. The growth of Bitcoin in January and February was expected to stop and turn into a correction. Therefore, Bitcoin was expected to move into a downtrend,” wrote Nekrasov.
The Fed will announce its rate decision at the Federal Open Market Committee’s March 21-22 meeting.
Alexander Politayko, the founder of MarsDAO, a decentralized autonomous organization developing deflationary products, said that he believes Bitcoin’s main support level is US$18,000.
“If Bitcoin does not hold on to this level, then the market may witness another wave of panic sales, and Bitcoin could return to the levels of last fall at US$16,000,” wrote Politayko in a LinkedIn response to Forkast.
Meanwhile, data from investment platform MacroMicro suggests that more Bitcoin owners are deciding against selling their assets despite turbulent market conditions. The percentage of Bitcoin supply that has been dormant for at least a year rose to an all-time high of 67.84% last weekend.
“There is a growing number of investors who view Bitcoin not just as a speculative asset, but also as a store of value or tool for savings. This is significant because it indicates a shift in the perception of Bitcoin from a purely speculative asset to one that has a practical use case,” wrote Politayko.
“As more people begin to use Bitcoin for its utilitarian value, the demand for the asset as a means to store value is likely to increase. This, in turn, can affect the price of Bitcoin in a positive way,” he added.
The global crypto market capitalization stood at US$923 billion on Friday at 9:00 p.m. in Hong Kong, falling 10.3% from US$1.03 trillion a week ago, according to CoinMarketCap data. Bitcoin’s US$385 billion market cap dominated 41.6% of the market, while Ether’s US$170 billion accounted for 18.5%.
Kava tops winners
Kava, the governance token of a layer-1 blockchain of the same name, was this week’s biggest gainer among the top 100 coins by market capitalization listed on CoinMarketCap. Kava rose 7.18% to US$0.86, and surpassed Solana in the total value of assets locked in the network this week, according to DeFiLlama data.
STX, the native token of Bitcoin smart contract layer Stacks, was the week’s worst performer among CoinMarketCap’s top 100, as it fell 33.54% to US$0.54. MINA, the token of privacy-focused blockchain Mina Protocol, followed closely as it fell 30.89% to US$0.61.
Investors will be anticipating the release of the U.S. Consumer Price Index data, a key indicator for inflation.
In addition, the European Union will likely announce a 50 basis point rate hike next week, as predicted by 60 economists polled by Reuters. European Central Bank President Christine Lagarde said the rate hike is “very, very likely.” The central bank’s interest rate is expected to rise to 3.00% as a result.
The banking industry is bracing for ongoing challenges as the drop of Silicon Valley Bank’s shares, plunging over 60% on Thursday, prompted a domino effect, causing the market value of the four biggest U.S. banks to plummet by more than US$50 billion, raising widespread anxieties in equity markets.
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