Last week, Bitcoin rose by 1.02% (as of 1 AM on the 24th). While the weekly volatility was not significant, the daily movements were quite dynamic. After the US Federal Reserve's March Federal Open Market Committee (FOMC), it temporarily recovered to over $87,000 but could not maintain the upward trend.
Bitcoin-related indicators were favorable throughout the week. First, the short-term investor's Market Value to Realized Value (MVRV) ratio dropped below 0.9. When this figure falls below 0.9, there is a tendency for prices to rebound in the market.
The US Bitcoin spot ETF, which had been experiencing net outflows until last week, turned to net inflows. Last week, the Bitcoin spot ETF recorded an inflow of $744 million, indicating a potential increase in demand. Whale investors' buying was also relatively stable.
However, the decisive factor was the Fed's March FOMC. At this FOMC, attention was focused on the dot plot released quarterly, and despite higher inflation, Fed members still expect two rate cuts within 2025, which stimulated investor sentiment.
The Fed announced that it would keep the benchmark interest rate unchanged and reduce the quantitative tightening (QT) scale from $60 billion to $40 billion. The Fed's QT reduction is expected to have a significant impact on the 10-year US Treasury bond supply starting from April.
Fed Chair Jerome Powell's press conference Q&A was also a big topic. Powell suggested that the current high inflation is likely temporary and downplayed the risks. He also showed a dismissive attitude towards the worsened GDP forecast and remained silent about the negative impact of Trump's tariff policies on inflation. The market perceived Powell's attitude as positive, causing stocks and cryptocurrencies to rise simultaneously after a long time.
However, the recovery mood did not last even a day. This was because Powell's phrase "inflation will be temporary" continued to be circulated in the media. Bitcoin, which had risen by over $47,000, dropped back to the $83,000 range within a day.
In fact, this phrase is a "sore spot" for Powell. He had used this expression during the COVID-19 period when prices surged due to the fiscal side effects of the US government's intervention. However, contrary to his assertion, price increases were not temporary, and eventually, steep rate hikes forced market investors to suffer.
Ethereum Loses Momentum... Is Binance Chain Aiming for Meme Coin Revival?
While Bitcoin fluctuated last week, the second-largest cryptocurrency, Ethereum, showed a somewhat unique price movement. Compared to Bitcoin, it rose less when prices went up and fell more when prices dropped.
There were several reasons for this. First, blockchain activity has decreased. Ethereum recorded its lowest network activity this year. Ethereum has a characteristic where the total circulating token supply increases when network activity decreases. Naturally, this has a negative impact on prices. The price has dropped to its lowest level in 17 months.
The Ethereum spot ETF market was also of no help. Unlike Bitcoin's spot ETF, which recorded net inflows for five consecutive days last week, the Ethereum ETF recorded net outflows for five consecutive days. The weekly net outflow amount reached $370 million.
The Petra mainnet upgrade, which was expected to be a positive catalyst, was also delayed. With overall downward indicators increasing, strong price resistance is forming. Although the US Treasury lifted sanctions on Tornado Cash (TORN), a mixing service for Ethereum, leading to a rebound in DeFi coins, Ethereum's price recovery was limited.
In contrast, Binance Chain (BSC), the original "Ethereum killer," showed remarkable vitality. Binance founder and former CEO Changpeng Zhao (CZ) has been activating the meme coin market using BSC. Binance recently conducted a community vote on listing meme coins Mubarak (MUBARAK) and Broccoli (BROCCOLI).
As a result, the spot inflow to PancakeSwap (CAKE), the representative decentralized exchange of the BSC chain, increased by nearly $3.5 million, causing the token price to surge by over 20%. The meme coin trend that was blowing on Solana (SOL) has moved to BSC, and it remains to be seen whether it will continue its price rally if the market recovers.
Attention on PMI on the 24th, US GDP on the 27th, and PCE on the 28th
Various macroeconomic indicators will be released this week. First, the US Manufacturing and Services Purchasing Managers' Index (PMI) will be announced on the night of the 24th (Monday).
Following that, the US Conference Board Consumer Confidence Index will be released on the night of the 25th (Tuesday), and the US Q4 GDP and initial jobless claims will be published at 9:30 PM on the 27th (Thursday). On Friday, the 28th, the US Personal Consumption Expenditures (PCE) Price Index will be announced.
These indicators can all reconfirm the US economic and inflation conditions that Chairman Powell had commented on. If inflation rises beyond a temporary level and economic recession appears to be a trend, it will act as bad news for the market.
There is also a possibility that Federal Reserve members who think differently from Powell will raise objections through public statements. In relation to this, Rafael Bostic, President of the Atlanta Fed, and John Williams, President of the New York Fed, will make statements on the 25th (Tuesday). On the 26th (Wednesday), Neil Kashkari, President of the Minneapolis Fed, and on the 28th (Friday), Thomas Barkin, President of the Richmond Fed, are scheduled to give public speeches.
In terms of macroeconomic conditions, there is a high possibility of unexpected situations occurring beyond the scheduled dates mentioned above. This is because the US government announced the date of implementing cross-national tariffs as April 2nd, and diplomatic tensions between countries will be intense this week. We hope there will be no events that severely impact risky asset prices. We wish our readers successful investments this week.
