Decentral Block Post

The news and events related to the banking crisis in the United States and Europe have led to a rotation of funds into investments considered less risky. According to the Financial Times, the U.S. money market funds in March witnessed an inflow of $286 billion. 

Along with money market funds, a portion of the money may also have seeped into the crypto industry. The increased demand could be one of the reasons for Bitcoin’s (BTC) strong performance in March.

The big question in crypto investors’ minds is whether the recovery will continue or if it is time to book profits in Bitcoin.

Bitcoin hodlers seem to be confident in the long-term story and are not getting lured into selling their holdings after the recent rally. According to Glassnode data, the percent of Bitcoin supply that has remained dormant since March 2021 has hit a new all-time high.

If the banking crisis is contained, it may lead to a short-term correction in Bitcoin and altcoins but any further problems in the legacy banking system may continue to attract investments into Bitcoin. Let’s study the charts to find out the critical support and resistance levels in Bitcoin and altcoins.

After gaining 11% between March 16 and March 18, the total crypto market capitalization has been battling resistance at the $1.2 trillion level. This same level was reached on August 14, 2022 and was followed by a 19.7% decline to $960 billion over the next two weeks. During the lateralization period between March 20 and March 27, Bitcoin (BTC) gained 0.3%, while Ether (ETH) posted modest gains of 1.6%.

One source of favorable short-term momentum is a change in the Federal Reserve’s monetary policy The U.S. Federal Reserve was forced to increase its balance sheet by $393 billion between March 9 and March 23 in order to provide short-term loans to failing banks. The objective of the plan was to reduce inflation, which has significantly impacted the cost of living and ultimately hampered economic expansion in the United States.

The balance sheet reduction runs counter to the central bank's previous nine-month trend of offloading some of its debt instruments, exchange-traded funds and mortgage-backed securities. The reversion of this strategy is initially bullish for risk assets because the Fed is acting as a lifeline for struggling banks and hedge funds.

On the other hand, the sector's regulatory risks were exacerbated on March 22 when Coinbase received a Wells notice from the U.S. Securities and Exchange Commission. The exchange's staking program, some of its digital asset listings, and wallet services could all be targeted by the regulator. Again, the uncertainty stems from not knowing which assets qualify as securities.

These competing forces may have been the primary reason for cryptocurrencies' narrow trading range near $1.18 trillion between March 17 and March 27. However, derivatives data presents compelling arguments for a rally toward $1.35 trillion and a retest of the $1 trillion threshold.

After gaining 11% between March 16 and March 18, the total crypto market capitalization has been battling resistance at the $1.2 trillion level. This same level was reached on August 14, 2022 and was followed by a 19.7% decline to $960 billion over the next two weeks. During the lateralization period between March 20 and March 27, Bitcoin (BTC) gained 0.3% while Ether (ETH) posted modest gains of 1.6%.

One source of favorable short-term momentum is a change in the Federal Reserve’s monetary policy. The U.S. Federal Reserve was forced to increase its balance sheet by $393 billion between March 9 and March 23 in order to provide short-term loans to failing banks. The objective of the plan was to reduce inflation, which has significantly impacted the cost of living and ultimately hampered economic expansion in the United States.

The balance sheet reduction runs counter to the central bank’s previous nine-month trend of offloading some of its debt instruments, exchange-traded funds and mortgage-backed securities. The reversion of this strategy is initially bullish for risk assets because the Fed is acting as a lifeline for struggling banks and hedge funds.

On the other hand, the sector’s regulatory risks were exacerbated on March 22 when Coinbase received a Wells notice from the U.S. Securities and Exchange Commission. The exchange’s staking program, some of its digital asset listings and its wallet services could all be targeted by the regulator. Again, the uncertainty stems from not knowing which assets qualify as securities.

These competing forces may have been the primary reason for cryptocurrencies’ narrow trading range near $1.18 trillion between March 17 and March 27. However, derivatives data presents compelling arguments for a rally toward $1.35 trillion and a retest of the $1 trillion threshold.

On March 27, European cryptocurrency investment firm CoinShares published its “Digital Asset Fund Flows Report,” which revealed that digital assets continue to attract investors' attention as concerns over the stability of traditional finance (TradFi) continues to grow. 

According to the latest report, investment products in digital assets experienced inflows of $160 million last week, the largest since July 2022, marking a significant reversal after six weeks of outflows totaling $408 million. The report also noted that “while the inflows came relatively late compared to the broader crypto market,” investors are increasingly concerned about the stability of the traditional finance sector.

Investments came from various countries, including the United States, Germany, and Canada, with inflows of $69 million, $58 million, and $26 million, respectively.

According to the report, Bitcoin (BTC) products received inflows of $128 million due to clients viewing it as a "safe haven" for the first time. However, not all investors shared this view, as short-Bitcoin products also saw inflows of $31 million. Nevertheless, short-Bitcoin remains the investment product with the most inflows year-to-date, though it is not the best-performing product from a price perspective.

On the other hand, Ether (ETH) products experienced outflows of $5.2 million last week, marking the third consecutive week of outflows. The report attributes this trend to investor anxiety over the Shanghai upgrade, expected to occur on April 12. Various altcoins also saw inflows, with Solana (SOL), Polygon (MATIC), and XRP products attracting $4.8 million, $1.9 million, and $1.2 million, respectively.

XRP (XRP) price is currently outperforming all other major cryptocurrencies as of March 27, rising over 20% in the past seven days.

XRP accumulation ahead of SEC vs. Ripple ruling

XRP has seen steady gains over the past seven days as the ongoing legal quandary between Ripple and the U.S. Securities and Exchange Commission (SEC) is expected to conclude by the end of March.

Meanwhile, the supply of XRP held by addresses with a balance between 10 million and 100 million tokens has risen by over 1% since February. That coincides with a 0.75% drop in the XRP supply held by the 1 million-10 million address cohort.

The addresses holding between 1,000 and 1 million XRP also increased their token holdings in the same period. That shows the XRP whales stacked up more tokens in the days leading up to the ruling on SEC vs. Ripple's so-called summary judgment.

Multiple observers, including legal expert John Deaton, see Ripple winning the case, arguing that the SEC may have failed to give the company a "fair notice" before suing it for committing securities fraud. 

XRP (XRP) price is currently outperforming all other major cryptocurrencies as of March 27, rising over 20% in the past seven days.

XRP accumulation ahead of SEC vs. Ripple ruling

XRP has seen steady gains over the past seven days as the ongoing legal quandary between Ripple and the U.S. Securities and Exchange Commission (SEC) is expected to conclude by the end of March.

Meanwhile, the supply of XRP held by addresses with a balance between 10 million and 100 million tokens has risen by over 1% since February. That coincides with a 0.75% drop in the XRP supply held by the 1 million-10 million address cohort.

The addresses holding between 1,000 and 1 million XRP also increased their token holdings in the same period. That shows the XRP whales stacked up more tokens in the days leading up to the ruling on SEC vs. Ripple's so-called summary judgment.

Multiple observers, including legal expert John Deaton, see Ripple winning the case, arguing that the SEC may have failed to give the company a "fair notice" before suing it for committing securities fraud.