MARKETS week ahead: March 18 – 24Last week in the news
Previous week brought back inflation fears on financial markets. The US equities and tech companies ended the week under pressure considering investors fears that the Fed might take a bit more time until the first rate cut, due to persistent inflation. US Treasuries also reacted on the same issue, ending the week one more time higher by 22 basis points. Price of gold and USD remained relatively stable during the week, however, with some volatility. Bitcoin reached its new all time highest levels, but still, ending the week a bit lower, above the $65K.
Inflation continues to be the number one concern for investors on financial markets. During several prior months, it has been on a clear down path, however, the latest data are showing that the Fed`s targeted 2% is going to be a bit harder to achieve. The latest figures for February are showing that the inflation in the US reached 3.2% on a yearly level, which was modestly above market estimate of 3.1%. At the same time, core inflation was standing at 3.8%, also higher from market estimate of 3.7%. Also, it should be considered that the PPI index was higher by 0.6% for a month, which points to a potential for further growth in inflation figures in the coming period. February inflation data were a bit concerning for investors, considering that it might mean that the Fed might take a bit longer time for the first rate cut during the course of this year. What Fed`s opinion on the latest inflation data will be better known during the week ahead, when the FOMC meeting is scheduled, as well as FOMC economic projections.
The Bitcoin frenzy continued during the previous week, with BTC reaching its new all time highest level at $73.4K. Although it finished the week around $66K, the MicroStrategy founder, Michael Saylor, announced a new debt issuance in order to collect additional $525 million with the aim of purchasing additional BTCs. It is currently estimated that MicroStrategy holds 205.000 BTC.
For the last several years, Bitcoin was named by the crypto enthusiasts as a digital gold. The latest analysis is showing that investors are currently almost equally investing in both gold and BTC, but are not transferring funds from one asset to another. As per research report conducted by JPMorgan, the conclusion is that there are no funds flows from BTC funds to gold, or vice versa, but it is rather that investors are just equally buying both gold and BTC. Among buyers are mainly speculative institutional investors and partially retail investors. The report concludes following: “We believe the debt-funded bitcoin purchases by MicroStrategy add leverage and froth to the current crypto rally and raise the risk of more severe deleveraging in a potential downturn in the future”.
CoinDesk is reporting that El Salvador`s President Bukele posted on the X platform that this country stored $400 million worth of Bitcoin into a cold wallet “in a physical vault within our national territory”. The post also included the picture of a wallet holding 5.689,68 BTC.
Crypto market cap
At the beginning of the week, the crypto market had its bull run continued, when the highest market capitalization reached $2.7 trillion. However, the second part of the week brought surprising US inflation data, as well as sort of market exhaustion, considering forthcoming BTC split and disappointed inflation data in the US, so the market entered into correction, ending the week with a total market cap of $2.4 trillion. News are reporting that over $800 million was wiped out from the futures market in forced liquidation. Analysts involved in the matter noted that historically highest levels were the trigger for liquidations in profit taking moves, and that some further moves to the downside are possible in the coming days. Whether this will be the case the market will decide, however, as there are sellers, there are also buyers, like for example MicroStrategy, who prepared a new round of debt securities in order to make new BTC purchases. Regardless of a new all time highest levels, total crypto market capitalization is ending the week around 2% lower from the week before, decreasing it by $62B. Daily trading volumes remained at relatively higher levels, moving around $252B on a daily basis. At Friday`s trading session, daily trading volumes reached the levels of around $400B. Total crypto market capitalization increase from the end of the previous year, currently stands at $819B, which represents a 50% surge from the beginning of this year.
Although the majority of coins finished the week in red, there were several altcoins which continued to perform in a positive manner. Bitcoin had a positive start of the week, however, it ended it with a cap decrease of almost 2%, where $26.7B was wiped from its capitalization. ETH had a higher drop of $38B in value, which was a decrease of 8.1% on a weekly level.
Several other coins with a significant weekly drop in value were Dogecoin, with a drop of $3.7B in value or 15.4%, Cardano lost $2.3B, or 9% in value, Polkadot decreased its cap by $1.1B or almost 8%, while Uniswap lost $1.25B or 14.6% in value. On the opposite side were several coins with quite good performance. Solana completely outperformed the crypto market, with a surge in value of 25% within a single week, adding $16.3B to its market cap. Binance Coin should also be mentioned with an increase of $14.5B in value or almost 20%. Maker managed to gain during the week 9.3% in value, which is an additional increase from 15.9% two weeks ago.
When it comes to coins in circulation, the increased activity still holds. Filecoin added an additional 0.5% of new coins on the market, while Cardano, Solana, Stellar and Polkadot added 0.2% of new coins each. It should be mentioned that Tether still continues to strongly add new coins on the market, increasing the number by 1.7% during the previous week.
Crypto futures market
Despite a significant drop in the value of BTC on the spot market, the BTC futures market managed to catch only a small drop on a weekly basis, related to short term futures. In this sense, futures maturing in March and April this year ended the week by 1.19% lower from the end of the previous week, while the longer term ones were traded higher from the week before. BTC futures maturing in December this year were last traded at level of $74.880 or 1.47% lower on a weekly basis, while those maturing in December 2025 were traded at $79.235 or 2.19% higher from the week before.
At the same time, ETH futures experienced a drop on a weekly basis for all maturities. ETH short term futures were traded lower by more than 7.5%, while the longer term ones were down by more than 4%. ETH futures maturing in December this year are still holding modestly above $4K level, but were down by 3.7% on a weekly basis. Futures maturing in December next year closed the week at price $4.183 or 4.03% lower from the week before.
