Market Wrap: Bitcoin Steadying Around $52K, Ether Surges on Rising Institutional Interest

Bitcoin hovers around $52,000 as markets wait and see whether the current price level will be held in the next few weeks.

• Bitcoin BTC$91,580.81 trading around $52,124.59 as of 21:00 UTC (4 p.m. ET). Slipping 0.32% over the previous 24 hours.
• Bitcoin’s 24-hour range: $50,941.99-$52,621.84 (CoinDesk 20)
• BTC trades above its 10-hour and 50-hour averages on the hourly chart, a bullish signal for market technicians.

“Assuming bitcoin remains stable through the course of the next week or so, I will be more comfortable that it shouldn't sell off and we'll move higher,” Chris Thomas, head of digital assets at Swissquote Bank, said.

However, some don’t see a flat market ahead, citing an over-leveraged market.

Darius Sit, co-founder and managing director of Singapore-based quant firm QCP Capital, said corporate buyers and market speculators are supporting bitcoin’s price rally, but that has also caused high funding rates in the derivatives market.

Markets should expect some unwinding of leverage positions in the near term, leading to more price volatility ahead, Sit said.

Read More: Bitcoin Above $52K as Market Expects More Volatility

Borrowing costs aren’t just an issue for crypto, of course. U.S. stocks fell slightly Thursday with a rise in the 10-year Treasury bond yield. Investors appear worried the uptick in rates could halt the current rally across the equities market.

The equities market has benefited from the unprecedented liquidity global central banks pumped into the system since last March, QCP Capital said in its Telegram channel. In order to hedge against inflation, many investors bought bitcoin.

Likewise, if bond yields continue rising sharply and thus damp inflation, it could lead to a bitcoin sell-off.

“'Everyone' is long equities because it’s a free trade from the Federal Reserve,” Swissquote’s Thomas said. “But they will need to change it, and when they do the equity markets will sell off. When equities sell off aggressively, many longs will get stopped out and will be forced to sell. Some will need to sell their bitcoin positions to cover margin calls, and this will drive the crypto markets lower, too.”

“All markets are correlated - and leveraged - and that's dangerous,” Thomas added.

Others, however, remain optimistic on the world’s oldest cryptocurrency.

"Bitcoin continues to inch closer to a $1 trillion asset and printing fresh all time highs,” Jason Lau, chief operating officer at San Francisco-based exchange OKCoin, said. “Market sentiment remains bullish and bitcoin adoption is gaining steam across both institutions and retail segments.”

On the institution side, money manager BlackRock announced it has started “to dabble” in cryptocurrencies, and MicroStrategy is preparing for another bitcoin purchase, according to Lau. On the retail side, the number of wallets with less than $1,000 of bitcoin is growing significantly.

According to data from Glassnode, the number of addresses with non-zero bitcoin balance is now more than 35 million as of Wednesday.

Breaking the $1 trillion market capitalization mark would have a deep meaning to bitcoin as an asset class, according to mining pool F2Pool’s co-founder, Shixing “Discus Fish” Mao.

“Bitcoin has surpassed Alibaba, Tesla and Tencent [by market capitalization] and only five companies and two precious metals can compete with bitcoin,” Mao said.

Ether follows bitcoin, surging on institution interest, DeFi and NFTs

Ether ETH$3,126.43, the second-largest cryptocurrency by market capitalization, was up Thursday, trading around $1,941.71 and climbing 5.77% in 24 hours as of 21:00 UTC (4:00 p.m. ET).

Some said ether’s latest rally was triggered by increased institutional interest.

“Since Grayscale Ethereum Trust (ETHE) just bought over 197,890 ETH worth $344 million on behalf of its investors in a span of two weeks, we are witnessing an influx of investments in ether only a few months after bitcoin’s institutional influx,” F2Pool’s Mao told CoinDesk.

Grayscale, like CoinDesk, is owned by Digital Currency Group.

Meanwhile, similar to bitcoin, there have been growing concerns around the overheated derivatives market on ether. Analysts warn the market should expect higher volatility in the near term.

Read More: Ether Looks Overleveraged as Cryptocurrency Hits New High Over $1,900

The growth in the decentralized finance sector, which is largely built on top of Ethereum blockchain, continues after the total value locked in DeFi dropped in the past week, according to data from DeFi Pulse.

The total value locked in DeFi currently stands at $41.8 billion, more than doubled from the beginning of this year.

“Ether approaching $2,000 could be seen as validation of all the dapps and use cases that have blossomed over the years - from DeFi to NFTs,” OKCoin’s Lau said, referring to nonfungible tokens. “It is also benefiting strongly from bitcoin's increased adoption. The ratio of ether to bitcoin remains at 2%-4%, a range that has persisted since September 2018.”

Read More: Blockchain Bites: Why Buy an NFT?

Other markets

Digital assets on the CoinDesk 20 are mixed Thursday. Notable winners as of 21:00 UTC (4:00 p.m. ET):

• tezos (XTZ) +4.9%
• cardano ADA$0.4291 + 4.43%
• OMG network (OMG) + 3.78%
• algorand (ALGO) + 3.21%

Notable losers:

• cosmos (ATOM) - 6.31%
• orchid (OXT) - 2.18%
• xrp (XRP) - 1.87%%

Equities:

• Asia’s Nikkei 225 fell slightly by 0.19% as investors watched markets in China, which just reopened after the Chinese New Year holiday period.
• The FTSE 100 in Europe closed in the red 1.4% as companies including Barclays and Credit Suisse logged losses in their quarterly earnings reports.
• The S&P 500 in the United States in the red 0.44% on higher jobless claims than what economists expected.

Commodities:

• Oil was down 1.78%. Price per barrel of West Texas Intermediate crude: $60.05.
• Gold was in the red 0.10% and at $1774.11 as of press time.

Treasurys:

• The 10-year U.S. Treasury bond yield fell Thursday dipping to 1.291%.