Decentral Block Post

Bitcoin (BTC) is beginning its “seventh bull cycle,” and investors should not be scared of crypto post-FTX, Pantera Capital believes.

In its latest “Blockchain Letter” on Feb. 8, the asset management firm’s CEO, Dan Morehead, predicted that 2023 would be a “year for rebuilding trust.”

Morehead: Crypto assets have “seen the lows” this cycle

With BTC price action retracing slightly after gaining 40% in January, some market participants still insist that new macro lows are due across crypto assets.

While the timing for such a scenario varies, consensus remains absent when it comes to how the market will rebound.

For Morehead, however, the time to flip bullish on crypto is already here.

Bitcoin (BTC) price and the wider crypto market corrected at the start of this week, giving back a small portion of the gains accrued in January, but it’s safe to say that the more experienced traders expected some sort of technical correction. 

What was unexpected was the SEC’s Feb. 9 enforcement against Kraken exchange and the regulator’s announcement that staking-as-service programs are unregulated securities. The crypto market sold-off on the news and given Kraken’s decision to close up 100% of its staking services, traders are concerned that Coinbase will eventually be forced to do the same.

The real question is, does this week’s price action reflect a change in the trend of bullish momentum seen throughout January, or is the “staking services are unregistered securities” news a simple blip that traders will disregard in the coming weeks?

According to analysts at analytics firm Delphi Digital, crypto is set up for a “roller coaster ride in 2023.” Analysts Kevin Kelly and Jason Pagoulatos explained the start of the year price action as being fueled by “recent increases in global liquidity” which are favorable to risk assets, but both agree that macroeconomic headwinds will continue to negatively impact markets until at least the third quarter of 2023.

Beyond the negative news of this week and its impact on crypto prices, there are a handful of metrics that provide some insight into how the rest of the year could be for the crypto market.

Bitcoin (BTC) price and the wider crypto market corrected at the start of this week, giving back a small portion of the gains accrued in January, but it’s safe to say that the more experienced traders expected some sort of technical correction. 

What was unexpected was the SEC’s Feb. 9 enforcement against Kraken exchange and the regulator’s announcement that staking-as-service programs are unregulated securities. The crypto market sold-off on the news and given Kraken’s decision to close up 100% of its staking services, traders are concerned that Coinbase will eventually be forced to do the same.

The real question is, does this week’s price action reflect a change in the trend of bullish momentum seen throughout January, or is the “staking services are unregistered securities” news a simple blip that traders will disregard in the coming weeks?

According to analysts at analytics firm Delphi Digital, crypto is set up for a “roller coaster ride in 2023.” Analysts Kevin Kelly and Jason Pagoulatos explained the start of the year price action as being fueled by “recent increases in global liquidity” which are favorable to risk assets, but both agree that macroeconomic headwinds will continue to negatively impact markets until at least the third quarter of 2023.

Beyond the negative news of this week and its impact on crypto prices, there are a handful of metrics that provide some insight into how the rest of the year could be for the crypto market.

The United States Securities and Exchange Commission is ramping up pressure on the crypto sector. On Feb. 9, the SEC reached a $30 million settlement with Kraken over the centralized staking program it offered to its users.

The news of the crackdown sent the price of Bitcoin (BTC) to a three-week low as investors became fearful of the regulatory enforcement. Ether’s (ETH) price also corrected on the news, cementing the token’s worst-performing day of 2023.

While the overall crypto market was down after the SEC announcement, bright spots arose, with decentralized liquid staking tokens LDO, RPL and FXS quickly rebounding from their sharp corrections.

According to Crypto Twitter analyst Korpi, Kraken and Coinbase represent 33% of all staked Ether, and if U.S.-based centralized exchanges are “forced” to cease offering staking-as-a-service programs, liquid staking derivatives providers could absorb that market share.

Based on recent tweets, crypto traders are well aware of this potential outcome, and this could be part of the reason for the short-term rebound seen in Lido’s LDO, Rocket Pool’s RPL and Frax’s FXS. Let’s take a look at some fundamental data points that might back their bullish thesis.

On Feb. 9, United States Securities and Exchange Commission (SEC) chair Gary Gensler explained why the regulator had cracked down on Kraken cryptocurrency exchange, forcing it to stop its crypto staking program for U.S. clients. This news may have rattled crypto investors and they sold aggressively. Bitcoin (BTC) crashed about 5% on Feb. 9 and several altcoins also followed suit.

The fresh round of selling has traders wondering whether the bear market has resumed or if the dip should be interpreted as a buying opportunity. This question may be troubling to investors, but for now the correction looks to be a normal corrective phase where cryptocurrencies give back some of the gains made in January. However, it would be prudent to wait for the correction to end and a bottom to be confirmed before considering fresh purchases.

Former BitMEX CEO Arthur Hayes said in a Feb. 7 blog post that Bitcoin may continue its bull run in the first half of the year but may face challenges in the latter half. Along with Bitcoin and Ether, Hayes is also bullish on altcoins but he said the trick is to get the timing right.

What are the important support levels to watch out for Bitcoin and altcoins in the near term? Let’s study the charts of the top-10 cryptocurrencies to find out.

BTC/USDT

The $22,800 support cracked on Feb. 9 and Bitcoin plunged to the strong support near $21,480. A lack of a strong bounce off this level suggests that the correction may deepen further.