BTC Plunges; Sequoia Capital Launches New Crypto-Focused Fund

Chart of the Day

On Thursday, the broader crypto market sank in tandem with most U.S. tech shares as investors reverted to a conservative stance on the back of escalated tensions between Russia and Ukraine. Whilst the concerns over a sharper Fed interest rate lift-off in March have been momentarily overshadowed by the aforementioned geopolitical tensions, investor speculation on market direction as monetary policies tighten look set to loom over both the traditional and crypto markets alike for some time to come. Although the prospect of a proper dialogue between U.S. and Russian officials in the next week has alleviated some of the fear and immediate selling pressures within the equities markets, this effect has so far yet to ripple across the crypto market. As of the time of writing, BTC has plunged below the $41k resistance, posting a significant 7.4% loss from 24 hours ago in the process of doing so.

Thankfully, the lower support levels at the $38k and $40k marks respectively are expected to cushion some of the blows as macroeconomic conditions continue to deteriorate. In a similar vein, ETH is now trading below the $3,000 level after shedding 7.4% of its market value within a similar timeframe, while most major altcoins are also submerged in a sea of red. Not all is doom and gloom though, as some key on-chain metrics do offer a glimmer of hope. For one, the Illiquid Supply Shock chart, one that details the ratio between the number of strong hands and the rest of the supply, has just reached a new high since April of 2021. This rise suggests that BTC HODL-ers, who did not distribute much at all in October and November of last year, are now setting new highs for dominance in the market in a way that bodes very well for both BTC and the larger crypto market in the long-term. In fact, it is only mainly the younger coins (the new entrants that bought into BTC in the first half of 2021) that are currently being tested most now due to the fact that they have a cost basis of $45-55k. For the HODL-ers, most are still holding in conviction.