Investors have been largely unfazed by the lull and remain so even as signs of a short-term correction start to show. The largest crypto asset by market cap lost 11.25% for the week, its worst since November, according to Coin Metrics. Bitcoin has struggled to break past the $30,000 level since hitting it a little over a month ago — and dropping several times since. Losses built Friday, with bitcoin trading at lows not seen since March. Ether fell 10.84% for the week. Coin Metrics measures a week in crypto, which trades 24 hours a day, from the 4:00 p.m. ET stock market close one Friday to the next. “Bitcoin’s price movements seem to correlate with different narratives,” said Michael Zhao, a research analyst at Grayscale Investments. “Bitcoin has switched between the narrative of a risk asset and the narrative of a flight to safety asset. The recent volatility of bitcoin might be a response to market still trying to figure out which narrative is more appropriate.” Crypto suffered from a wave of negative news this week, including: a wave of long liquidations, triggered by a false rumor about the U.S. government selling its bitcoin, a spike in Bitcoin transactions due to the current revival of “Bitcoin NFTs” and memecoins, which led to Binance briefly pausing customer withdrawals , reports of major market makers reducing U.S. crypto operations , and uncertainty around the U.S. debt ceiling and Federal Reserve policy. But investors have been expecting rockier times ahead, after the closure of its main fiat-to-crypto onramps in March during the banking crisis and with the ongoing regulatory crackdown on crypto. Grayscale’s Matt Maximo called it the “aftermath of a strong start to the year.” Data from CryptoQuant also suggests investors took profits this week, as much of the selling volume came from bitcoin holders who purchased between November 2022 and January of this year. “Despite the decline, bitcoin is still trading in a relatively tight range,” Zhao said. BTC.CM= 5D mountain Bitcoin (BTC) this week For the past few days, bitcoin has ended down to flat. One analyst said this trend alone could weigh on investor mood. He also said the bitcoin chart is showing a head-and-shoulders pattern – three tops with a higher high in the middle – which analysts use to identify a price reversal after a prolonged uptrend. “All in all, bitcoin seems to be on the verge of correction, and the next stops in sight are the $26,000 psychological level or its February high at about $25,300,” said Yuya Hasegawa, crypto market analyst at Japanese crypto exchange Bitbank. He also noted that investors should monitor yields on the 2-year Treasury note, which has had an inverted relationship with bitcoin this year. Wolfe Research is more optimistic. “Bitcoin finds itself rolling beneath resistance as the back-test of support continues to play out,” Rob Ginsburg said in a note this week. “Much like we saw in March, we feel this leads to a reacceleration.” However, “for bitcoin to continue higher it will have to defy a few narratives,” he added. “For one, the average stock is going lower. … Can bitcoin diverge from stocks and, more specifically, can it diverge from tech, which is rolling over with semis, which are leading tech to the downside?” Bitcoin is still up 59% for the year, but down about 7% for the quarter so far, according to Coin Metrics.
