First Mover Asia: Bitcoin minnows have pushed the whales to the side; Bictoin, Ether steady

Bitcoin (BTC) briefly touched a five-week low around $38,547 early Monday, then bounced and ended the trading day higher.

Good morning. Here’s what’s happening:

Prices: Bitcoin dipped to a five-week low around $38,547 early Monday before bouncing back up above $40,000 later in the day.

Insights: The size of the main swimmers in the crypto sea has changed.

Technician's take: BTC appears to be oversold on intraday charts.

Prices

Bitcoin (BTC): $40,818 +1.3%

Ether (ETH): $3,040 -1%

Top Gainers

Top Losers

Bitcoin looks "boring" as traders "push on a string"

Bitcoin (BTC) briefly touched a five-week low around $38,547 early Monday, then bounced and ended the trading day higher.

All in all, though, the price action looked pretty tame – just another day spent in a now months-long range between about $36,000 and $48,000. As of press time the largest cryptocurrency was changing hands around $40,800.

"In digital assets," Jeff Dorman, chief investment officer at the crypto fund manager Arca, wrote Tuesday in his newsletter, "a boring market is often viewed as a weak market, because if it’s not going up, it must be going down."

"Bored traders in digital asset markets become impatient traders, which leads to a lot of pushing on a string," Dorman said.

Ether (ETH) briefly dipped below $3,000, reaching a low of $2,880 earlier in the day before recovering back over $3,000.

Traditional markets were pretty anemic on Monday as well. See below.

Markets

S&P 500: 4,392, -0.01%

DJIA: 34,412, -0.1%

Nasdaq: 13,332, -0.1%

Gold: $1,981/ounce, -0.3%

Insights

Bitcoin Whales Are Out, Minnows Are In

Bitcoin critics often accuse the world’s largest digital asset of being too centralized, and controlled by a cabal of elite “whales” much like the traditional financial system.

But data from Glassnode shows that throughout 2022, this has become less the case with the mid-tier whales (holding 100-1,000 BTC, or less than around $40 million) trimming their exposure and the “minnows” picking it up.

(Glassnode)

Late January was a rough time for crypto. Meta, the entity formerly known as Facebook, released rough earnings, making many investors question the firm’s metaverse shift and weighing down heavy on metaverse majors. Concerns at the time over the year’s first U.S. Federal Reserve meeting also brought down stocks, which in 2022’s narrative also means crypto. Weak demand from Asia, then shut down because of the long Lunar New Year holiday, didn’t help much.

All of this is normal, Morgan Stanley wrote at the time, pointing out that dramatic slides were nothing new for crypto.

Prices were naturally compressed and the whales took this as a chance to sell. The supply of bitcoin held by addresses that have between 100-1,000 BTC fell off a cliff, while the supply of bitcoin held by wallets with 0.1-10 bitcoin dramatically increased.

(Glassnode)

Almost in parallel, the number of short-term holders increased showing that this was new money flowing into bitcoin.

This correction gave retail investors a good chance to get into the market while distributing the holdings of bitcoin across many, not few, hands. It also shows that retail investors continue to have confidence in bitcoin and used this chance to augment their holdings.

The same was happening with equities; retail participation increased during the turbulent first few months of the year. The Financial Times newspaper reported that retail continues to buy the dip.

Now here’s the exception: Retail investors also say the market is rigged against them. Is there a similar survey for crypto investors?

Technician's take

Bitcoin four-hour price chart shows support/resistance with RSI on bottom (Damanick Dantes)

Bitcoin (BTC) appears to be stabilizing after a 15% decline over the past two weeks. So far, the cryptocurrency is holding support above $37,000, similar to what occurred in early March.

The relative strength index (RSI) on the four-hour chart is rising from oversold levels despite the recent downtrend in price. That could signal bullish activity toward the $45,000 resistance zone.

Still, BTC has remained in a tight trading range around the $40,000 price level over the past few months. A positive momentum signal on the daily chart is needed in order to signal a price recovery outside of the current trading range.

On the weekly chart, BTC is holding long-term support above its 100-week moving average at $35,700. Positive momentum readings remain intact over the intermediate term, albeit with bearish signals on the monthly chart.

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