Crypto newsletter: Bitcoin drops to its lowest since mid-March as risk-off sentiment prevails

The past week was another negative one for the cryptocurrency market as the ever-increasing list of macro uncertainties weighed on market sentiment and caused broad aversion towards risky assets. Bitcoin jumped towards resistance at $43,000 on Thursday, only to pull back sharply after Fed Chair Powell said that the central bank was ready to raise interest rates more aggressively to tame inflation. Major cryptocurrency is treated by some investors as an inflation hedge, and it's also seen as a risky asset that might come under pressure during a period of shrinking economic growth. The bearish sentiment prevails today as investors continue to digest worsening events in Ukraine and the deteriorating pandemic situation in China which overshadowed the outcome of French Presidential elections. Bitcoin's market dominance increased to 41.3%. The capitalization of all digital assets in circulation fell to 1.77 trillion, while an average daily trading volume is registered at $ 77.06 billion.

Crypto Fear and Greed Index increased to 27 on Thursday, however the upward move turned out to be short-lived and index fell to 23 over the weekend, remaining in the extreme fear territory.

While extreme fear often indicates that the market reached local low, it may be too early to catch the falling knife as long as the macro uncertainty persists. Source: Alternative.me

Bitcoin:

• CEO of Binance Changpeng Zhao, said the adoption of cryptocurrencies would rise as geopolitical tensions escalate and the use of the dollar as a sanctions tool grows. He believes the US will lose out to the rest of the world if it continues to suppress bitcoin.
• Several US congressmen expressed their negative opinion regarding mining cryptocurrencies like BTC, ETH using the environmentally damaging Proof-of-Work (PoW) consensus algorithm.
• EU officials taking into consideration banning BTC trading because of its energy and environmental impact. Bitcoin's energy consumption continues to increase and is attracting the attention of environmental organizations and regulators. 
• Payment network Strike has announced integrations with Shopify, alternative payment processor Blackhawk Network, and point-of-sale provider NCR, making it easier for global merchants to accept BTC payments. 
• According to Glassnode data, the proportion of the Bitcoin supply that has stayed dormant for at least a year is now at all-time highs and shows that more coins are being hodled for longer rather than spent.

The supply now dormant for a year or more jumped above 64% for the first time on record. Source: Glassnode

On Friday, Bitcoin dropped below psychological $40,000 as the tech-heavy Nasdaq index slipped over 2% on Fed rate hike fears, which shows that correlation between these two instruments is strong. On Monday Bitcoin extended declines to $38,167, the lowest since March 15. Nearest major support is located at $38,000 and coincides with 78.6% Fibonacci retracement of the upward wave launched in July 2021. Should break lower occur, downward move may accelerate towards $36,000 level. Source: xStation5

Cardano:

• Cardano price fell below local support at $0.97 which coincides with 50 SMA (green line) suggesting that the bears are in control.
• On the other hand, IntoTheBlock’s Global In/Out of the Money (GIOM) model suggests that price may move towards the psychological $1.0 level. 

Index shows that roughly 217,000 addresses that purchased nearly 24 billion ADA tokens between $0.92 to $0.97 are “Out of the Money.” Source: IntoTheBlock

Cardano erased nearly all the gains witnessed since March 14 and is currently heading towards major support at $0.75. Source: xStation5