Bitcoin, Ethereum bounce back but still show ‘signs of overheating’ – K33 Research
Last week's decline in Bitcoin (BTC) prices led to an “oversold” market structure, a sign of an overbought market, according to analysts at crypto research firm K33 Research.
In the “Ahead of the Curve” report published on March 19, K33 head of research Anders Hales and senior analyst Vettel Lunde said that Bitcoin's “slow bleeding” and the ever-decreasing value of the crypto market have exposed cryptocurrencies accompanied by high funding rates. Leverage-induced increased downside volatility.
Analysts say Bitcoin has lost more than 13% since hitting a high of $73,835 on March 14. Ether (ETH) and BNB chain BNB (BNB) also lost 17% and 1%. Their value is in order, according to the report.
“Bitcoin is currently trading 14% off its all-time high. In all previous bull markets, Bitcoin has seen losses as deep as 30% before recovering.”
However, open interest futures are “holding tight when perps command a significant premium.”
Helseth and Lunde added that overheated conditions were supported by shallow or negative flows into Bitcoin investment products last week.
The chart below shows that Bitcoin exchange-traded products (ETPs) have seen a decline in inflows, with March 18 seeing a “year-on-year net inflow of 4,453 BTC.”
The negative flows stem from a grayscale-converted Bitcoin Trust Exchange Traded Fund (ETF) with $642 million withdrawn from the ETF on March 18, according to data from Farside Investors.
The other nine new ETFs saw shallower inflows, with net inflows resting at $154 million as of March 18.
Analysts at K33 Research, however, cautioned that it is “too early” to determine whether the space has reached a saturation point for Bitcoin ETFs and whether recent activity represents a regime change.
“Despite the negative three-day flow, weekly net inflows into Bitcoin ETFs still sit at a strong 27,000 BTC due to back-to-back massive inflows through Wednesday of last week.”
However, shallow ETF flows have been a key contributor to Bitcoin's “negative price” action.
RELATED: Bitcoin Price Feels FOMC Clash as Traders Eyes Move to Mid $50K Zone
Bitcoin may find support around the $50,000 support level.
According to data from Cointelegraph Markets Pro and TradingView, Bitcoin is trying to find the $64,000 level after falling below $62,000 on March 1.
The supply area between $64,500 and $63,500 is the key support that traders and analysts are looking for, because a breach of this level can lead to deep corrections.
“The typical Bitcoin bullrun return is 30%. In December, we were already on the longest winning streak in Bitcoin history,” Charles Edwards, founder of Capriol Investments, said in a post on X.
“A 30% return would be $51,000. These are all levels we should be comfortable with waiting for opportunities.”
Analyst Peter Brandt predicted a fall in BTC to $50,000.
“Bitcoin $BTC completes the H&S high on the Factor Real Range Chart,” Brandt said in an X comment with the chart below.
“BTW, a correction to the mid/upper $50s will retest the boundary at the superior channel where price rose from Feb 26/27.”
As reported by Cointelegraph, the meeting of the Federal Open Market Committee in the United States this week remains the main focus on the macro face, not only the crypto market but all risk assets across the board.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
