Following a four-week winning streak, Bitcoin’s bull run has finally taken a pause. Bitcoin registered its largest weekly decline since the Covid-Crash, ending the week over 21% lower. Consequently, Bitcoin’s market capitalization fell under $850 billion, a substantial reduction from its peak of $1.07 trillion. This comes after a rout in global bond markets, driving yields higher and sparking a sell-off in risk assets. The relentless downtrend in bond prices unnerved investors and put pressure on stock markets, with the Nasdaq suffering its worst single-day loss since October. In the last few days, Bitcoin has struggled to clear above $50,000, signaling that sell-side pressure has yet to subside. On Monday morning, Bitcoin stood at $46,100, up over 3% from a day earlier.Meanwhile, institutional investors have capitalized on the opportunity to accumulate more. MicroStrategy announced that it had bought over $1 billion worth of additional Bitcoin after finalizing another convertible debt sale.The software company revealed that it paid an average price of $52,765 per Bitcoin, including fees and expenses. Its acquisition of approximately 19,452 Bitcoins puts MicroStrategy’s total holdings of the bellwether cryptocurrency at 90,531.Digital asset manager Grayscale has also added hundreds of millions of dollars worth of Bitcoin (BTC) and Ethereum (ETH) to its portfolio in the last few weeks.The crypto behemoth tallied up an additional 7,280 BTC and 240,000 ETH to its crypto holdings throughout February.
In last week’s recap, we noted that Bitcoin prices have extended into overbought territory, recording new all-time highs day after day. From a technical perspective, we observed that BTC prices have converged from both the 21-day & 55-day exponential moving averages. As Bitcoin retreats this week, prices have swiftly reverted towards these critical support areas. All eyes will also be monitoring the $40,000 support level. A firm buying volume around these areas could be a positive sign for Bitcoin holders.In the derivatives market, funding rates for Binance Futures USDT-margined & Coin-margined contracts fell to a 2-week low, suggesting that leveraged long positions have significantly been reduced as prices retreat. This is confirmed as open interest on BTC futures significantly declined from $3.4 billion to $2.5 billion.
Similarly, Futures Basis for quarterly and bi-quarterly contracts has declined significantly as well.
Despite the correction, BTC dominance holds steady at 62%, with no significant change from last week. The index, which measures Bitcoin’s market value relative to the entire crypto market, has established a base of around 62% as capital moved away from altcoins to Bitcoin.
Trade Bitcoin Futures with up to 125x leverage on Binance. Sign up now!Ethereum (ETH) lost over 26% last week, moving in tandem with the broad-based decline in cryptocurrencies. Since its peak at $2,042, ETH has struggled to muster any kind of bullish momentum as prices drift lower. ETH has been particularly weak when compared to BTC. The ETH/BTC chart has persistently trended lower, suggesting investors’ preference to own Bitcoin at the moment. The pair recorded its third consecutive week of losses, declining over 25% in the last three weeks.Even rival platform tokens such as Polkadot (DOT) and Cardano (ADA) have outperformed ETH recently. Persistently high gas fees on the Ethereum blockchain have been a bane for users, prompting them to search for alternative venues. This has spurted opportunities for alternative blockchain networks, including Binance Smart Chain, Cardano, and Polkadot.
Like Bitcoin, ETH funding rates have dramatically declined in the past week. For USDT-margined ETH contracts, funding rates have plummeted over 90% from 0.23% to 0.01%.
Meanwhile, funding rates for Coin-margined contracts have turned negative to -0.038%, suggesting that a growing number of traders are betting against the cryptocurrency.
Cardano (ADA) registered a historic milestone last week, becoming the third-largest cryptocurrency by market capitalization for the first time in its history. ADA bucked the trend and gained over 16% last week.
At the time of writing, ADA’s market capitalization stands over $40 billion, according to crypto-tracking source CoinMarketCap (CMC). Cardano’s Ada received a fresh wave of optimism and buying volume after a Dubai-based crypto investment fund, FD7 Ventures, announced plans to sell off 750M USD worth of their Bitcoin holdings to increase the company’s positions in Cardano (ADA) and Polkadot (DOT).ADA registered a new all-time high of $1.488 on Binance following the announcement before pressures in the broader cryptocurrency market pushed it back down to $1.15 on Sunday.As a result, trading volume for ADA futures contracts has surged to a new record, averaging over $3 billion in daily volume (vs. less than $1 billion two weeks ago). The open interest for ADA futures also rose to over $220 million, gaining over 100% in the last two weeks.