- Bitcoin has tested another key level of resistance at US$45,300 and could possibly breakout to US$50,000 purely based on technicals
- Technical factors aside, sentiment remains mixed because of macro factors, including central bank tightening, the ongoing war in Ukraine and overall declining risk appetite
Cryptocurrencies have done relatively well this past week, all things being considered.
Rising alongside equities, Bitcoin is well above US$40,000 and taking efforts to test a key technical level of resistance at US$45,300.
Chart watchers are suggesting that Bitcoin is tracing a pattern that could see the benchmark cryptocurrency build on recent gains, forming a so-called pennant that suggests a momentum tailwind which could see it head towards US$50,000.
Using a popular technical analyst technique of Fibonacci extensions, Bitcoin’s performance over the past several months suggests that targets of between US$50,450 and US$54,000 are now in play.
Nevertheless, market sentiment continues to be weak, especially with the prospect of a tightening U.S. Federal Reserve monetary policy.
And policy tightening could feature more strongly than technical indicators in the coming week as even the narrative of cryptocurrencies being used by ordinary Russians to bypass sanctions, appears to be losing steam.
Examining flow data from blockchain analytics firm Chainalysis suggests that Russian ruble-cryptocurrency trading pairs on exchanges appears to be in decline, even as European regulators insist that Russians are using cryptocurrencies to evade sanctions.
Chainalysis data reveals that as recently as March 18, ruble-denominated cryptocurrency trading volume had dropped by more than half its recent peak of close to US$70 million on March 7.
Part of the reason of course is that Russians looking to trade in cryptocurrencies weren’t doing it to trade per se, they were looking to spirit money out of the country and away from Russian banks.
Ruble-denominated cryptocurrency trading isn’t even a significant source of volume either, at an estimated US$7.4 million, ruble trading volume only forms a fraction of global trading volume.
But that probably doesn’t tell the full story either because ruble-cryptocurrency trading pairs have never been popular to begin with, unlike dollar-backed stablecoins.
In all likelihood, Russians looking to leverage cryptocurrencies would have bought Bitcoin, Ether and stablecoins, but aren’t really looking to trade.
And with liquidity so low in ruble-crypto trading pairs anyway, it makes more sense for most Russians to buy and hold, which has little impact on price.
