The current fall of the cryptocurrency and Bitcoin market can be safely called one of the most significant in history. Daily losses of investors in the futures market reach USD 1 billion. In mid-March, there were hints of the end of the downward dynamics and the gradual transition of the asset to the accumulation phase, followed by the development of an upward movement. However, the fundamental component of the bearish trend turned out to be too weighty, and the market capitalization fell to $1.16 trillion.
The main reason for the fall of the cryptocurrency market was the increased correlation between Bitcoin and stock indices. The Fed's policy leaves no chance for this kind of assets, which are rapidly losing liquidity due to the fear of investors. Bitcoin has also partially discredited itself as a hedge against inflation, as well as a reserve asset. In addition, the sanctions pressure put additional pressure on the crypto market and showed that there are no "safe" assets where capital can be hidden. At the same time, the Fed makes a clear bet on the fight against inflation and strengthens the US dollar and Treasury bonds, exposing stocks and other high-risk instruments at risk.
All these fundamental factors are reflected in the quotes of the cryptocurrency market. Over the past two weeks, the market has tested every conceivable and unthinkable support zone. It is important to note that during the current crisis, long-term investors are actively working, and the number of wallets where volumes have reached at least one BTC has updated its historical high. This indicates active averaging of positions, and this indicates faith in the crypto in the long term. In technical terms, certain signals are also visible for a possible reversal or suspension of the fall.
Let's start with the total capitalization chart, where the price hit a key support area at $1.2 trillion. The last time the price reached this mark was in July 2021, when a protracted flat trend began with a gradual drop in prices due to the policy of the Chinese authorities. The current support level has been impregnable for more than a year, and therefore it can be assumed that the price will not be able to break through it.
On the Bitcoin charts, the situation is absolutely identical. The last time the price reached $26.5k was at the beginning of 2021. We have already noted that the Bitcoin correction correlates in percentage terms with the correction of the entire market. And given that both charts were in a strong support zone, we can expect a sideways reversal or an upward correction.
However, there is also an unpleasant side to the analysis of the Bitcoin daily timeframe. Since November 2021, a bear flag pattern has formed on the charts of the main cryptocurrency with a potential movement in the region of $20k. Over the past seven days, Bitcoin has fallen in price by 31%, so there is every reason to believe that the price may reach the bearish pattern.
The same situation is observed on the Ethereum charts. The price of altcoin completely duplicates the movement of Bitcoin and the graph of the total capitalization of the crypto market. The price hit a key support zone at $1,780, which has been untouched since July 2021. At the same time, technical indicators are in the oversold area, and MACD continues to deepen into the bearish zone below the zero mark.
If the current support zones are broken, then the market will go into free fall, where new support zones will form spontaneously. This is also affected by the growing market volatility and the ongoing cascade of sales. First of all, it is worth monitoring the situation around Bitcoin, which is the main compass for the movement of the entire crypto market.