Bitcoin Holds Above $28k Despite Bearish Divergence and Low Liquidity

2023/04/03 13:34:42

The crypto market spent the past week with small fluctuations, with Bitcoin hovering around the $28k mark. Bulls and bears are fighting, but numerous analysts point towards low liquidity and bearish technical indicators as a sign towards a potential downturn. Ethereum, the second-largest cryptocurrency, still held its support level as developers are bracing up for the Shapella hard fork.

Trading with the TrueUSD (TUSD) stablecoin has surged over the week, according to crypto price tracker, CoinGecko. TUSD’s 24-hour trading volume surpassed $1 billion for most of Thursday and Friday, and this is a significant increase from earlier this month when TUSD was trading around sub-$100 million on its daily trading volume.

Also, The Arbitrum Foundation has confirmed it will break up a controversial governance package into a series of separate votes, bending to community pressure after holders of its ARB token staged a loud revolt. This decision was made in response to disgruntle over the Foundation's "ratification" vote, where they endorsed previously executed decisions, such as transferring almost $1 billion in tokens to themselves, despite being a centralized organization responsible for advancing Arbitrum's purportedly decentralized ecosystem.

In other crypto news, the price of Solana, which fell nearly 95% in 2022, partly due to its association with FTX and Alameda Research, has started to recover. The recovery happened at the same time as Messari's assessment of the Solana ecosystem, which indicated that its staking and decentralization had not only remained stable but had actually improved following the FTX debacle.

Crypto Heat Map | Source: Coin360

Top Altcoin Gainers and Losers

Top Altcoin Gainers

Solar (SXP) ➠ +159.13%

Stellar (XLM) ➠ +17.3%

Hedera Hashgraph (HBAR) ➠ 15%

Top Altcoin Losers

Stacks (STX) ➠ -14.05%

Arbitrum (ARB) ➠ -11%

Mina (MINA) ➠ -9.23%

Fear and Greed Index at 63, Bitcoin Remain In Greed Zone

Past week, the Fear and Greed Index figure was 64, and this is the third week in a row that Bitcoin closed in the greed zone.

Fear and Greed Index | Source: Alternative

This Week’s Crypto News Highlights

Hong Kong Most Likely to Benefit the Most From US Crypto Crackdown: Kaiko CEO

According to Ambre Soubiran, the CEO of Paris-based institutional crypto market data provider Kaiko, the US government's cold stance on cryptocurrency regulation may lead to a shift in the industry's "center of gravity" to Hong Kong. Despite the US being a prominent player in the crypto sector, the government's regulatory approach through enforcement has caused concern among some companies, developers, and investors who may seek friendlier environments elsewhere.

Soubiran stated to The Wall Street Journal on April 1 that this recent crackdown on crypto in the US inadvertently aids Hong Kong's ambition to become a leading crypto hub.

Russia Proposes New Currency for BRICS Countries

Reports suggest that the BRICS alliance, consisting of Brazil, Russia, India, China, and South Africa, is making efforts to distance itself from the US dollar hegemony. Alexander Babakov, the State Duma Deputy Chairman, recently claimed at the St. Petersburg International Economic Forum event in New Delhi, India, that the alliance is working towards creating its own currency.

He emphasized the importance of both nations collaborating to find a new payment medium and suggested that digital payments may be the most promising and viable option. According to Babakov, the proposed currency could benefit China and other BRICS members rather than the West, and would be backed by gold and other commodities such as rare-earth elements.

Japan Plans to Form Expert Panel to Explore Digital Yen: Report

NHK, a popular Japanese news outlet, reported that Japan's Finance Ministry plans to establish an expert panel in April to investigate the possibility of introducing a digital yen. The panel will primarily focus on developing a framework for a central bank digital currency (CBDC), using a technical study conducted by the Bank of Japan over the past two years as a reference. The ministry aims to utilize the findings from the expert panel to prepare for the potential issuance of a digital yen.

While CBDCs are still in their early stages of development, critics of central bank-issued digital currencies have expressed concerns that such technology would give monetary authorities unprecedented control over financial transactions. Furthermore, some argue that CBDCs are unnecessary and that traditional payment methods are sufficient.

Bitcoin (BTC/USDT) Technical Analysis

Bitcoin has been consolidating below the biggest resistance/support zone of the last 2+ years and things could turn south for either bulls or bears if this value area is broken.

BTC/USDT Chart on the Daily Timeframe — Bearish Divergence

The biggest case analysts are making goes in favor of BTC bears. They are pointing to a bearish divergence showing on the daily timeframe, as they claim this is indicative of a major dump before Bitcoin starts the journey to $30k.

BTC/USDT Chart on the Daily Timeframe — Support and Resistance Zones

The bulls, on the other hand, are relying on liquidity squeeze around the $28,500 zone. Should they manage to beat this hurdle, price targets could extend beyond the $30,000 mark.

The current resistance seems to sit at $28,812 while the current support is $26,591. The Volume Oscillator is also indicating that the volume of Bitcoin trading has decreased over the past few hours. In total, the liquidity levels have reached a 10-month low.

This may suggest that, despite a 70% year-to-date gain, traders are cautious and waiting for more confirmation before making any significant moves. Another explanation for the low liquidity is also market makers losing access to their USD payment rails.