Crypto Settles Down While Searching for Direction

By Sam Blumenfeld

Bitcoin (BTC, Tech/Adoption Grade "A-") and other cryptocurrencies are trading more calmly after the overdue pullback sent prices tumbling lower.

BTC is trying to reestablish a positive direction with three consecutive green daily candles, but it still has plenty of ground to cover before it can look to challenge its late-March high of over $48,000. It's trading flat today as it hovers above $41,000.

Cryptocurrencies and other risk assets face several key challenges in the short term. The 8.5% annual consumer price increase is making a strong case for the Federal Reserve to raise interest rates more aggressively, while tensions in Ukraine are ramping up.

Both are likely to have a large impact on both crypto and traditional financial market trading.

Bitcoin will need to overtake $44,300 again to surpass its 21-day moving average. If it can power through and regain its momentum, the asset could easily overtake previous strong resistance between $45,000 and $46,000.

Here's Bitcoin's price in U.S. dollars via Coinbase Global (COIN):

In a slight reversal of the recent trend, Ethereum (ETH, Tech/Adoption Grade "A") is faring worse than Bitcoin today. Still, its chart looks much better since mid-March.

Overall, Bitcoin is struggling to keep the gains that it logged during the rally, while Ethereum is holding its ground more effectively and is still tracking a 17% positive monthly move compared to Bitcoin's 5% increase.

Ethereum has fallen below its 21-day moving average after testing it five times between the end of last week and the beginning of this week. ETH will now need to surpass $3,260 to overtake it. If it's successful, it could see relatively little resistance before making another run at $3,600.

Here's Ethereum's price in U.S. dollars via Coinbase:

Index Roundup

The crypto market trended lower this week as the pullback extended. Because of the holiday week, the Weiss Crypto Index data was cut off a day early on Wednesday.

The Weiss 50 Crypto Index (W50) dropped 13%, with most cryptocurrencies finishing the six-day holiday week in the red.

The Weiss 50 Crypto Ex-BTC Index (W50X) lost 12.78%, with Bitcoin mostly mirroring the broader market's performance.

Breaking down performance this week by market capitalization, it's clear the more speculative small- and mid-caps suffered more than their more-established counterparts, which held their value the best.

The large-caps managed to hold the most ground, with the Weiss Large-Cap Crypto Index (WLC) decreasing 9.79%.

Continuing last week's underperformance, the Weiss Mid-Cap Crypto Index (WMC) logged the biggest decline of 17.25%.

The small-caps finished in the middle of the road again, but they faced the most midweek volatility. The Weiss Small-Cap Crypto Index (WSC) fell 14.35%.

Smaller cryptocurrencies experienced significant midweek volatility, which could extend if the market continues to pull back.

Notable News, Notes and Tweets

What's Next

The crypto market faces short-term headwinds, but government and central bank recklessness are making the case for crypto more compelling.

The bankruptcies of Lebanon and Sri Lanka show the dangers of unsustainable decision-making. And other countries could face the same struggle as the pandemic, strained supply chains and the war in Ukraine intensify problems.

Regulatory concerns — like those highlighted by my colleague Alex Benfield yesterday — have spooked traders recently, but those effects shouldn't last. It's a necessary step along the way in the industry's path to mainstream adoption. While the spotlight on crypto's regulatory climate makes matters more difficult in the short term, it should help the industry sustainably mature over the long run.

In the short term, keep an eye on your inbox for your Weiss Crypto Daily updates to help you navigate these uncertain times.

Best,

Sam