Bitcoin lingers at US$24,000 level after Wall Street’s worst day in 2023 so far

Bitcoin, the world’s largest cryptocurrency by market capitalization, inched up 0.48% in the week from Feb. 17 to Feb. 24, trading at US$23,932 at 8:30 p.m. on Friday in Hong Kong. Ether slid 1.04% in the same period to change hands at US$1,648.

Despite Wall Street posting this year’s worst performance on Tuesday, Bitcoin remained resilient, briefly dropping below the US$24,000 price level the next day, before reclaiming it again.

“The fact that Bitcoin remained resilient during Wall Street’s biggest loss of the year and even recovered after briefly dipping below the US$24,000 mark suggests that Bitcoin’s correlation to U.S. equity markets is not very strong. In fact, Bitcoin’s correlation to the S&P 500 is at its lowest since late 2021, according to data from Dylan LeClair, senior analyst at digital asset fund UTXO Management, on Twitter. However, the two assets are still positively correlated,” wrote Jonas Betz, a Germany-based crypto analyst, in a LinkedIn response to Forkast.

Kasper Vandeloock, chief executive officer of quantitative trading firm Musca Capital, told Forkast that there is still “a strong correlation” between the Nasdaq and the crypto market and that investors are looking for fiat alternatives. 

“People are fleeing to Bitcoin as trust in fiat currencies and traditional systems are dropping. Banks in Lebanon are being put on fire because of limits on cash withdrawals. The value of currencies has dropped a lot, people are looking for alternatives,” Vandeloock said.

Karlen Danielian, the founder and chief executive officer of play-and-earn metaverse 2040world, said that Bitcoin is highly correlated with the U.S. stock market, particularly the S&P 500.

“Recently, Bitcoin has shown strength compared to the stock market. There is a theory that this is due to expectations for the development of the cryptocurrency market in China via Hong Kong. I believe that Chinese money can greatly help the growth of the cryptocurrency market, and Bitcoin in particular, in the coming years,”  wrote Danielian to Forkast.

Unemployment benefits claims in the U.S. fell by 3,000 last week to 192,000, according to data released by the Department of Labor on Thursday, lower than the 200,000 forecasted by economists surveyed by Reuters. The tight labor market could have prompted the U.S. Federal Reserve to continue raising interest rates.

The global crypto market cap stood at US$1.09 trillion on Friday at 8:30 p.m. in Hong Kong, the same value as a week ago, according to CoinMarketCap data. Bitcoin’s US$461 billion market cap represented 42.2% of the market, while Ether’s US$201 billion accounted for 18.5%.

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Biggest gainers: STX & CFX

STX, the native token of the Stacks Network, was this week’s biggest gainer among the top 100 coins by market capitalization listed on CoinMarketCap. STX was up 133% on the weekly chart to trade at US$0.75 at 8:30 p.m. in Hong Kong.

Stacks is a Bitcoin layer-2 that allows developers to deploy smart contracts, bringing decentralized applications such as NFTs to the network. The STX token started its rally on Feb. 19, fueled by renewed interest in Bitcoin-native NFTs after the launch of Bitcoin Ordinals, a protocol that allows users to inscribe data on satoshis, the lowest denomination of Bitcoin. 

Ordinals Inscriptions surpassed 154,000 on Feb. 21, adding more fuel to the STX rally.

“BTC now has an extra use case other than just being a currency. BTC is now a place where NFTs or “digital artifacts” can be created and stored on every single node on the BTC network. The added benefit of having a rock-solid use case of NFTs added to BTC will impact miner fees to go up as demand for network resources go up,” wrote Yohann Calpu, chief marketing officer at NFT data aggregator CryptoSlam, to Forkast.

Betz said that Bitcoin Ordinals have an immutability benefit over traditional NFTs.

“Ordinals have an immutability benefit over traditional NFTs as ordinals allow users to store all the data directly and permanently on the Bitcoin blockchain. Proof-of-stake-based NFTs on the other hand often require off-chain data storage and could be altered using metadata,” wrote Betz.

Conflux’s native token (CFX) was this week’s second-biggest gainer in the top 100 coins. Conflux Network is an interoperability-focused protocol and the only public, permissionless blockchain with regulatory compliance in China.

CFX was up 84.54% on the weekly chart, changing hands at US$0.27. The token started its rally on Jan. 26, after news emerged of Conflux partnering Little Red Book, a Chinese social media platform, enabling over 200 million users to mint their profile pictures as NFTs on Conflux.

Next week?

“The current support level is in the US$23,375-23,600 range, as this marks the lows of the retracements of Bitcoin’s failed attempts to break through US$25,000,” wrote crypto analyst Betz.

“The most important resistance that Bitcoin has to overcome is the psychological mark of US$25,000. Unfortunately, Bitcoin has failed to break through this resistance three times in the last 7 days. This in turn means that a future breakout is even more significant and could be greeted with great euphoria,” he wrote, adding that he expects “a breakout and subsequent fall of Bitcoin into the US$21,000 to US$22,500 range,” due to Bitcoin’s previous attempts to breach US$25,000 and the Fed’s signals to raise interest rates further.

Aziz Kenjaev, head of partnerships at decentralized crypto derivatives exchange GammaX, also expects a downtrend next week, with Bitcoin heading towards US$21,500-22,300. 

“As per the technical outlook, Bitcoin bounced back from the important dynamic resistance at US$25,266, this level was retested again and created a strong static resistance, hence buyers’ pressure is getting weaker. If bears can push BTC below US$23,500 it will most likely drop to US$21,500-22,300,” wrote Kenjaev.

“As the regulatory provisions of the crypto market are set to take higher pace this year, after the FTX collapse, we might also see watchdogs reporting concerns over several crypto-projects. In addition, FSB (Financial Stability Board) will release a report on findings in their cryptocurrency and stablecoin research in collaboration with the International Monetary Fund. This could result in uncertainty in the market,” added Kenjaev.

Danielian said that US$25,000 is a key price level for Bitcoin: “It is crucial for Bitcoin to break through and establish itself above the US$25,000 level, and then we can say that the market has turned from bearish to bullish.”

Vandeloock said there is a large focus on Asian and Chinese coins right now, which he expects to shift back to AI coins, adding that “AI projects such as 0xAI have gained massive attention.”

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