Crypto investors have had a volatile week, with Bitcoin and Ethereum both experiencing sharp price dips before stabilizing. On Tuesday, Bitcoin peaked at $26,000 and Ethereum topped out at $1,770,after the release of a mildly upbeat consumer price index (CPI) inflation data for February, before dipping by 5% on Wednesday.
The 6% CPI had improved on the previous month’s reading and offered investors looking for more monetary policy dovishness hope the US Federal Reserve would at least temporarily stop its recent diet of interest rate hikes.
Despite the fluctuations, Bitcoin is still up 14.5% from last week and Ethereum is up just 8.5%.
Liquidations lead to losses in crypto futures
The most significant losses in the crypto markets this week were due to liquidations; over a 24-hour period on Wednesday, $300 million worth of futures contracts were liquidated.
The recent market volatility caused losses of over $140 million in Bitcoin futures and $80 million in Ether futures. Over half of those came from shorts and longs being hit almost equally, indicating that both groups of traders were affected almost equally.
Conflux’s CFX tokens and Filecoin’s FIL futures experienced liquidations of $8 million and $5 million, respectively, due to increased trading volumes.
Banking troubles affect crypto investors
Bitcoin and other cryptocurrencies experienced significant losses on Wednesday as investors weighed concerns about Credit Suisse and potential European banking instability.
Credit Suisse’s shares tumbled by 13%, along with several European banking stocks including French banks BNP Paribas and Société Générale, which fell by 8% and 10%, respectively.
Meanwhile, the US S&P 500 and Dow Jones Industrial Average (DJIA) both fell by 0.7% and 0.8%, respectively. However, the tech-heavy Nasdaq Composite rose 0.05%.
According to Will Tamplin, a senior analyst at technical analysis-based research firm Fairlead Strategies, BTC’s resistance is strong near $25,200. He noted the presence of “intermediate-term overbought conditions in place that have become a headwind,” increasing the short-term downside risk to support from the 200-day moving average, which is around $19,800.
Some market observers suggest that investors are seeking alternative assets following the recent collapse of Silicon Valley Bank.
Alex Adelman, co-founder of bitcoin rewards app Lolli, suggested that “investors are looking to bitcoin for stability in highly uncertain market conditions.”
Adelman added that while many see bitcoin as a hedge against inflation, its relationship to traditional finance is more complex. He believes that bitcoin’s unique value proposition works as an alternative to the traditional financial system at large.
