Crypto Review

The crypto market reacted positively to the shift in sentiment

Market Overview

The crypto market continued to slide over the weekend as demand for risky assets decreased. This gloomy tone was reversed by Trump’s announcement that strikes on Iran’s energy sector would be halted, causing a sharp turnaround in market sentiment. It is important to note that, this time, cryptocurrencies are reacting very positively to good news and rather sluggishly to bad news. This change occurred in mid-March; before that, we saw only a moderate response to negative news, while potentially good news went almost unnoticed.

Fig. 1. The crypto market is attempting to shift to a bull trend.

By Monday, the sentiment index had fallen into negative territory, dropping to 8. Currently, the situation in the crypto market does not appear as severe as it did at the end of February, when sentiment was at the same level.

Fig. 2. The sentiment index has returned to single-digit territory.

Bitcoin is nearing $71K, having increased nearly 5% since Monday morning. Geopolitical news has been a strong influence, dispelling the gloom of recent days. Although BTC was at these levels not long ago, from a technical analysis standpoint, this marks a notable shift. This time, we are witnessing powerful upward momentum from the key 50-day moving average. A sustained move above it would indicate a trend reversal, supporting the shift in market reaction to news and the dynamics of the sentiment index. It would also signal a return to normality after a prolonged period of oversold conditions. However, cautious traders will likely prefer to wait for the price to stabilise above $75K—the recent peak and an important Fibonacci retracement level.

Fig. 3. Bitcoin is attempting to consolidate above the 50-day MA.

News Background

Crypto market participants remain cautious, showing no excessive activity, according to VanEck. Selling by long-term holders has slowed. Further market dynamics will depend on central bank policy and overall risk appetite.

CF Benchmarks has calculated that Bitcoin’s fair value is approximately $136,000, taking into account the growth of the global M2 money supply. However, under current conditions, BTC reacts more strongly to high Fed rates and market sentiment than to money supply growth.

Ethereum could reach its lowest point by the end of March, after which the market is expected to enter a recovery phase, according to BitMine CEO Tom Lee. In his view, a significant proportion of short-term traders have already exited the market, whilst long-term holders continue accumulating.

Following recent adjustments, Bitcoin’s mining difficulty dropped nearly 8% to 133.79 T. This is the second-largest decline since the start of the year. According to TheEnergyMag, only two of the 14 largest publicly traded US mining companies are mining BTC profitably.

Daily altcoin trading volumes on Binance, the largest crypto exchange, have fallen by 80% from their October peak, indicating waning investor interest, notes analyst Darkfost. Historically, such periods often present the most attractive entry opportunities.

The FxPro Analyst Team

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