10 March 2023 21:03, UTC
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Bitcoin (BTC) and ether (ETH) plunged for a third consecutive week as investors continued to wrestle with a toxic mix of macroeconomic and industry-specific events.
This week’s 11% weekly drop in bitcoin’s price follows declines of 3% and 4% in the two prior weeks. Ether’s price fell 11.4% versus 2% and 5% downturns in the same time period. The two assets’ year-to-date gains, once as high as 40%, have trimmed to 20% and 17%, respectively.
Both BTC and ETH activity spiked during Thursday’s sell-off because both traded in volumes that exceeded 150% of their 20-day moving averages. Other assets that saw volume spikes during downturns were XRP, MATIC, BNB and DOT.
Cryptocurrencies with a market cap of at least $1 billion were deeply in the red and none posted positive weekly returns. The one exception was utility token LEO’s 0.6% gain.
The year-to-date leader among assets above $1 billion in market capitalization is layer one blockchain Aptos’ APT token, which is up 196% year to date.
Following a 33% price drop over the past seven days, last week’s leader, STX, fell completely out of the rankings when its market cap declined to $800 million.
The decline in STX, the token of bitcoin layer 2 protocol Stacks, was more pronounced than bitcoin’s. Its correlation coefficient of 0.63 relative to BTC indicates a solid relationship, although it has fallen from a year-to-date high in excess of 0.90.
Trading was a tale of two parts of the week. The tepid pace on Monday and Tuesday yielded to aggressive selling on Wednesday and Thursday. A bearish cocktail of inflationary fears, crypto industry contagion and potential U.S. government-driven selling pressure appears to be too much weight for markets to bear at the moment.
The week ahead could provide additional headwinds for markets. The U.S. government’s act of moving bitcoin recovered from a dark web hack to new wallet addresses, including one owned by Coinbase, almost certainly foreshadows a sale that will likely affect the crypto’s price and keep investors unsettled.
The U.S. Bureau of Labor Statistics will release its monthly consumer price index (CPI) and producer price index (PPI) on Tuesday and Wednesday, respectively. Those inflation indicators could further upset markets, depending on their direction.
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