BTC, ETH and Altcoins all up as market heads towards $2.5 trillion

AQTIS Market Insights Newsletter #7 — Monday March, 4th 2024

While last week saw ETH and altcoins have their moment in the sun, Bitcoin roared back over the weekend, to surpass $65,000. BTC is now less than 6% away from its previous all-time high, gaining 27% in the last seven days.

Open interest at Chicago-based CME Group’s Bitcoin and Ether futures market is just 1.8% away from their respective record highs. The increase in the number of outstanding contracts is a sign of greater interest in crypto-related exposure and hedging among US institutions.

This is despite Grayscale, the world’s largest BTC ETF by volume, continuing to experience outflows.

While investors are optimistic about Bitcoin breaking its previous all-time high, altcoins have experienced similar growth. Dogecoin was up nearly 20% and Shiba Inu 34% in the last 24 hours, leading a rally across a range of coins that saw the likes of Solana, Cardano and BNB all record healthy gains.

But some indicators suggest the markets have overheated in the short term, with possible corrections due over the coming week.

Chart of the week

Bitcoin open interest reaches a record high on the CME.

Source: CoinGlass

BTC Analysis

While Bitcoin is approaching its previous all-time high, our analysis suggests that things are turning bearish in the short term. But “the trend is your friend”.

From a TA perspective, BTC is overextended and is currently facing a bearish divergence. A bearish divergence is a pattern that emerges when the price reaches higher highs, but the technical indicator makes lower highs. The technical indicator is the RSI, a common momentum or sentiment indicator.

Although there is a bullish attitude on the market, the discrepancy means that the momentum is slowing. This could suggest that a price drop may be approaching.

Order books

Strong resistance has appeared in the $65,000 range. If that resistance can be broken, the next step up is $67,500. If it doesn’t, $60,000 has become a solid base with large bids but most importantly, a lot of liquidity.

Liquidity pools

Looking at the liquidity pools, there is a healthy base at $60,000 and below over the last seven days. Above $65,000 however, things look quiet, suggesting the market is preparing for a retreat despite the bullish weekend.

Coin of the week

It’s officially meme season in the crypto markets. Dogecoin is up 103% over the last week.

Looking at the technicals around Doge, open interest has continued to grow, and aggressive market buys are really clear if we check the CVD, meaning Doge is gaining attention from retail users who usually trade by market orders. They are more impatient than sophisticated market participants who use limit orders.

While the price is at an inflection point, with options to kick on to the next level at $0.35, it could also slip back to $0.15. For continuation, $0.15 is a good level to step in, but the invalidation in higher time frames is too far. I would recommend waiting for moderate long liquidations to get in the trend.

Traders have been looking for opportunities to make profitable trades will awaiting which direction Bitcoin and Ethereum will go next.

Looking Ahead

It’s a busy week ahead for macroeconomics. In Europe and the U.S., the focus remains on when central banks will start cutting interest rates. All eyes are on the European Central Bank rate decision on Thursday, U.S. monthly jobs data on Friday and the U.K.’s spring budget on Wednesday.

In Asia, China takes center stage as the National People’s Congress gets underway on Monday. The event acts as a bell weather for sentiment across Asia more broadly. With China’s economy lagging, people are eager to hear of what measures will be deployed to address it.

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That’s all for now. Stay tuned for more exciting updates, and we’ll catch you in the next one!