Bitcoin took investors by surprise on March 13th after surging to a new all-time high of $61,800. As late buyers began to enter the market in anticipation of higher highs, the Tom DeMark (TD) Sequential indicator sensed that BTC’s uptrend was about to reach exhaustion. This technical index presented a sell signal on the 4-hour chart projecting that a steep correction was underway.
Reuters’s interview with a senior government official in India who stated that the nation would almost certainly ban cryptocurrencies seems to have been the pullback’s catalyst. The report reignited fear among crypto enthusiasts in that nation as the new bill would make holding any digital assets a criminal offense punishable by up to 10 years imprisonment.
Following the news on India’s crypto ban, analytics firm CryptoQuant suggested over $1 billion worth of Bitcoin were sent to a US-based exchange. Such a massive transfer of tokens to a single exchange could have had the ability to tank BTC’s market value and affect the cryptocurrency industry’s stability.
As emotions ran high, many of the so-called “weak hands” panic sold their holdings, leading to a significant decline. Bitcoin dropped by nearly 12% from Monday’s open, March 15th, of $60,450 to hit a low of $53,180, according to CEX.IO’s exchange rate.
Despite the chaotic beginning of the week, a new wave of positive developments came next, helping Bitcoin recover some of the losses incurred.
Morgan Stanley announced that it would offer a selection of its clients’ exposure to Bitcoin. The American multinational investment bank is also reportedly in conversations to purchase one of Koreas’ largest cryptocurrency exchanges. Moreover, SBI Crypto, a subsidiary of SBI Holdings, revealed that its mining pool service would allow miners to earn from collaborating. At the same time, Chinese tech giant Meitu added 386 BTC and 16,000 ETH to its portfolio.
Now that a Blomberg survey revealed that between $10 billion to $40 billion from the new US stimulus checks could flow into cryptocurrencies, investors seem to have regained confidence in Bitcoin. Prices were able to bounce back and close the week at $58,135.
Although Bitcoin holders incurred a weekly loss of 4%, momentum is building for significant gains to come over the next few weeks.
Ethereum Closes the Week in the Red as Miners Rebel
India’s crypto ban also seems to have had a big impact on Ethereum’s price. The second-largest cryptocurrency by market capitalization took a 10% nosedive after opening the weekly trading session at $1,885, going as low as $1,714, according to CEX.IO’s exchange rate. Although this support level helped prevent Ether from a steeper decline, uncertainty mounts around this altcoin’s future.
Several Ethereum miners plan to move their hashrate to Ethermine for 51 hours on April 1st to protest against EIP-1559. This protocol update introduces a fee burn “ETH buyback” mechanism, which affects the revenue miners can earn.
Ether miners’ ability to coordinate such type of action put in question the network’s decentralization. But it also allowed Ethereum founder Vitalik Buterin and developer Danny Ryan to agree to push ETH 2.0’s Phase 1.5 forward. The move will help the blockchain achieve the scalability it desperately needs and make miners obsolete.
Buterin got immediate support from ConsenSys, which reported on the update in a blog post titled “Proof of Stake Is Coming To Ethereum Sooner Than We Think.”
Since Phase 1.5 is not set in stone yet, Matt Garnet argued that there could be other ways to reduce transaction fees without rushing things. The Ethereum developer created a proposal that could improve support for transaction batching. While it remains uncertain whether EIP-3074 will be accepted in the next protocol upgrade, it shows that the community is actively looking for solutions that do not have a serious impact on the network’s stability.
Such commitment was well perceived by market participants, who gave Ether a vote of confidence. As buy orders piled up, ETH’s market value rose by 5.80% to close Friday, March 19th, at $1,807. Thus, investors incurred a weekly loss of 4.10%.
Sitting on Top of Stable Support
Transaction history shows that both Bitcoin and Ethereum sit on top of stable support. Nearly 830,000 addresses had previously purchased 490,000 BTC at $55,000. Meanwhile, roughly 1 million addresses are holding more than 14 million ETH, around $1,770.
Bitcoin and Ether will likely continue trending upward and may march to new all-time highs as long as these crucial interest areas hold. However, failing to hold above these key support levels could be catastrophic for the top two cryptocurrencies by market capitalization. A spike in sell orders could see BTC dive to $50,000 and ETH to $1,500.
Konstantin Anissimov, Executive Director at CEX.IO
This article was originally posted on FX Empire