Market deep dive: Market volatility continues this week

During very early Asian hours on Monday, BTC$ finally jumped through its 45k resistance and rallied all the way above 48k in late European hours. This put BTC in positive territory for 2022. As Mike Schwitalla wrote in our “Technical Analysis Tuesday” report, the technical breakout through the strong resistance (at the 45k level) paved the way to the upside: to the new resistance level in the 52-52K range. Another supporting factor is the ongoing purchasing of the Luna Foundation Guard, which currently holds BTC in its wallets worth nearly $1.5bn, and stablecoins worth $848m (most likely for buying more BTC).

During the rest of the week, BTC$ consolidated in a relatively tight range around 47k. Then on late Thursday  afternoon…

The second largest crypto hack in history came to light on Tuesday (a week after hackers successfully stole ETH and USDC worth more than $600m). The exploit successfully targeted the Ronin Sidechain Bridge, powering one of the most popular play-to-earn games: Axie Infinity. According to Ronin Network’s official Twitter thread, they “are committed to ensuring that all of the drained funds are recovered or reimbursed”. However, it remains to be seen if this will actually happen. This is certainly bad news for Web3 projects; market reaction was very limited and only had an effect on the projects involved.

Most economic headlines that came out over the past week were rather negative.

Surprising was that March YoY inflation in Germany was on the upside (7.6% vs. an expected 6.7%) and in France (5.1% vs. an expected 4.8%). Final (Q4) GDP growth in the US was slightly lower than expected at 6.9% QoQ, and earlier in the week, the 10-2 year treasury yield spread briefly turned negative (historically, this is a precursor to a recession). And optimism around peace talks between the Ukraine and Russia has faded.

Yesterday’s vote in the EU parliament in favour of regulating self-hosted wallets could potentially lead to a ban of (anonymous) transactions between self-hosted wallets and transactions on decentralised exchanges.

Although everything is still in early legislation process, the vote took the market by surprise, and most cryptocurrencies sold off.

At the time of writing, BTC$ is trading at 44.6k, just around the levels we saw a week ago.

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