Market wrap: Bitcoin close to $ 56k, struggles with flat activity on the exchanges

Bitcoin entered the week looking for direction, with moderate trading volume and currency inflows continuing to fall.

“There is not much action and prices have remained stable around the $ 56,000- $ 58,000 mark,” Alessandro Andreotti, an over-the-counter bitcoin broker (OTC), told CoinDesk.

As of March 21, there were less than 2.44 million BTC available on exchanges, the lowest since August 2018, according to blockchain analyst firm Glassnode.

The decline in bitcoin balances on the exchanges was seen as a bullish signal – that fewer holders are preparing to make profits or dispose of the cryptocurrency, suggesting minimal selling pressure in the near future, as CoinDesk previously reported.

As the influx of bitcoin into the exchanges continues to decrease, it also suggests that price volatility, which has remained high, is mainly driven by “speculative demand” rather than any fundamental factors, Philip Gradwell, chief economist at the analytics firm. blockchain Chainalysis, wrote in his newsletter on March 19.

So far, the oldest cryptocurrency is changing hands for $ 55,772.02, according to data from CoinDesk 20, down 2.98% in the last 24 hours. The sudden drop in price to $ 55,685.09 in the past few hours came after US Federal Reserve Chairman Jerome Powell Jerome Powell said cryptocurrencies “are not really useful deposits of value” during a virtual digital banking panel. hosted by the Bank for International Settlements.

Andreotti also argued that the frenzy in non-fungible tokens (NFTs) caused a great deal of distraction, especially due to the large media coverage.

“The focus has shifted almost entirely for NFTs.” he said. “That’s where all the attention is at the moment.”

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Ether (ETH) fell on Monday, trading around $ 1,744.03 and falling 2.85% in 24 hours from 20:00 UTC (16:00 ET).

The ether to bitcoin price ratio, currently around 0.03, within the approximate range of 0.02-0.04 since the end of 2018, suggests that ether is still closely linked to bitcoin’s price performance.

Some, however, think that the ether price will soon benefit from the rapid growth in NFTs and decentralized finance (DeFi), if it has not already done so.

Compared to bitcoin, “the ether appears to be solidifying as the thermometer of smart contract activity and is subject to more diverse narratives, such as the demand for DeFi [and] NFTs, ”said Stefan Coolican, chief financial officer at investment firm Ether Capital. “It may be that the ether is taking on a bitcoin-like role in relation to other smart contract platform tokens and has decoupled itself from bitcoin in the sense of being a bitcoin ‘alt’.”

Read more: ‘Altcoin Season’ leaves some Bitcoin alternatives frozen

Coolican suggested that high gas prices on Ethereum (gas is the cost for miners to carry out transactions) is the main reason why the NFT and DeFi sectors, both based mainly on the Ethereum blockchain, did not increase the price of ether.

The total amount blocked at DeFi is currently $ 43.6 billion, according to DeFi Pulse. The figure has more than doubled since the beginning of the year. NBA Top Shot, the largest market for NFT trading, has seen its trading volume double in the past 30 days, data from DappRadar show.

It is “really difficult to pinpoint a factor in Ethereum, as there is a lot going on,” added Coolican.

The digital assets in CoinDesk 20 are mostly in red on Monday. Notable winners from 20:00 UTC (16:00 ET):