Monthly EarnBIT: Market Insights for March 2024 | Posted by EarnBIT | Coins | April 2024
- that much Fed unlikely to cut interest rates before summer This is due to higher-than-expected inflation and employment indicators.
- Despite Tenkun, ETH has struggled to keep up with BTC. As my mood changes.
- Memecoin soarsUser acquisition and transaction volume.
- Cryptocurrency ETN and BlackRock’s RWA Fund Supported BTC price.
- that much Spot Bitcoin ETF trading volume nearly triples Despite the GBTC leak.
- bitcoin halving can trigger Rally will last until the end of 2025.
As inflationary pressures remain in the US, the outlook for monetary easing is shifting further into the future. As of April 2, 2024, CME FedWatch projects a 4.5% probability of a rate cut in May. This compares to 59% in June and 74% in July.
The Swiss National Bank (SNB) cut interest rates by 25 basis points to 1.5%, moving ahead of global banks. Switzerland was the first major economy to cut interest rates amid falling inflation, while the Bank of England and the Federal Reserve kept interest rates steady in March.
us inflation
Personal consumption expenditures (PCE) inflation rose slightly in February to 2.5%, 10bps higher than the previous month. The core index, excluding highly volatile food and energy, rose 2.8% compared to the same period last year and 0.3% compared to the previous month. The uptick was widely expected.
Core PCE guides the Fed’s decisions on potential interest rate cuts. Chairman Jerome Powell repeatedly confirmed his intention to initiate easing measures this year, giving investors hope for a rise in risky assets. At its March 20 meeting, the FOMC left interest rates unchanged at 5.25% to 5.5% and still targeted an inflation rate of 2%.
The Consumer Price Index (CPI) report in early March showed key figures for February were higher than expected, up 3.8% year-on-year and 0.4% month-on-month, up 3.7% and 0.3% respectively. The headline index showed its largest monthly increase since September.
US labor market
The March jobs report, due out April 5, is expected to show 200,000 new jobs. This is below February’s 275,000 but higher than the pre-COVID-19 average. In the five years leading up to the pandemic, the U.S. economy added 191,000 jobs per month.
The expected uptick would mark the 39th consecutive month of growth and the labor market will continue to resist the Fed’s efforts. Additionally, the unemployment rate could fall from 3.9% to 3.8%.
A strong jobs report could derail the Fed’s interest rate cut plans as wage growth could hamper progress toward its 2% target. On the other hand, surprisingly weak numbers could accelerate cuts in a bid to stimulate business activity and stave off a recession.
Cryptocurrency markets saw significant volatility in March. Despite a notable decline in spot Bitcoin ETF inflows, institutional participation remained robust.
The fund’s total trading volume was $111 billion, nearly tripling from February ($42.2 billion). In April, the support effect from ETFs will combine with the Bitcoin supply halving.
BTC: Turbulence after the new ATH
On March 14, BTC soared to an all-time high of $73,737.94, before falling to $60,000 within a few days. The coin showed overall resilience and gradually recovered its value.
Despite the chaos, Coinglass data shows monthly returns (+16.81%) slightly exceeding the historical average (+13.42%).
ETH: Slumps Despite Dencun
Ether has struggled to keep pace with Bitcoin. It was significantly below the monthly average (+22.86%), rising only by 9.33%. Unlike BTC, ETH failed to beat ATH, hitting $4,070.60 on March 12.
Despite the much-anticipated Dencun upgrade, the results fell short of expectations. This reduces transaction costs in Layer-2 networks. The decline towards the end of the month coincided with a BTC correction.
Memecoin Rally
Memecoin served as a major driver of market growth throughout March. Their surge signals a paradigm shift and sparked interest in cryptocurrencies beyond BTC and ETH, which are praised for their real-world utility.
All memecoins in the top 100 by market capitalization have seen significant gains. In particular, dog-themed tokens soared amid community enthusiasm and speculative frenzy.
FLOKI (FLOKI) and dogwifhat (WIF) led the gains, up nearly 299% and 251%, respectively. Shiba Inu (SHIB) soared more than 156%, and Dogecoin (DOGE), the top memecoin by market capitalization, rose less than 70%.
Solana’s scalability, low transaction fees, and vibrant ecosystem give it an edge in this space. Demand for memecoins has led to a surge in activity and a surge in failed or missed transactions. According to a report by Cointelegraph, total trading volume on March 16 exceeded that of Ethereum by $1.1 billion.
Base has also seen an increase in usage and retail investment. Jupiter’s trading volume and JUP tokens have grown rapidly, solidifying Solana’s status as a major liquidity aggregator and popular platform for memecoin trading.
Performance of Spot Bitcoin ETFs
In March, trading volume for spot Bitcoin ETFs nearly tripled to $111 billion, with Grayscale and BlackRock dominating the market. Grayscale’s GBTC outflow exceeded $15 billion, but as of April 1, the cumulative net outflow amounted to $86 million.
Bloomberg ETF analyst Eric Balchunas summary, “While all ETFs win in terms of profitable hits, $IBIT wins the volume race and is officially Bitcoin’s $GLD.” As CoinDesk points out, the ETF has “completely transformed” the Bitcoin market, driving its rally to new ATHs in March.
Dencun and Speculation on Ether ETF
Ethereum’s Dencun upgrade, completed on March 13, significantly improved the Layer-2 network, making it more scalable and cheaper to use. A new type of transaction, Blob transactions, has reduced network fees by up to 90% (on Starknet). At the base they sank $0.31 ~ $0.0005.
However, the price plunge has reduced ETH supply to 2022 levels. The decrease in supply could be caused by a sharp increase in Ethereum transactions and more fee burning. Historically, upgrades have rarely resulted in price changes.
The price pattern was consistent with expectations of a correction following a shift in sentiment and a reduced likelihood of a spot ether ETF launch. As of this writing, Polymarket says there is only a 22% chance of approval by May 31.
Increasing network activity and decreasing supply could support ETH in the future. But it “continues to suffer from a lack of name recognition among non-traditional investors,” said Joseph Edwards, head of research at Enigma Securities.
VanEck’s spot ETF application is the first item in the SEC’s May 23 decision. This approval will boost institutional demand and pricing. Standard Chartered bank expects ETH to reach $8,000 by the end of 2024.
However, skeptics point out Ethereum’s uncertain legal status. The SEC has not yet classified Ethereum as a commodity or security. Unlike Bitcoin, which is officially a commodity, Ethereum is traded on a proof-of-stake blockchain, and users earn profits by locking their coins.
Due to staking, ETH may eventually be considered a security. “Getting the SEC on board to allow an Ethereum ETF would be a very difficult deal and is highly unlikely at the moment,” concluded Anders Helset, head of research at K33.
Cryptocurrency ETN on LSE
The London Stock Exchange announced the launch of a cryptocurrency ETN on May 28. This move helped BTC surpass $71,000 on March 26.
Exchange-traded bonds linked to Bitcoin and Ethereum are only available to professional investors approved by the UK regulator, the Financial Conduct Authority (FCA).
Transaction applications will be accepted from April 8. Although not retail-related, the LSE’s decision mirrors the SEC’s approval of a spot Bitcoin ETF in January 2024. The UK government’s intention to make the UK a cryptocurrency hub is also well known.
BlackRock’s RWA Fund
A leading asset manager has revealed plans to launch a real asset (RWA) tokenization fund. The BlackRock USD Institutional Digital Liquidity Fund, based on the Ethereum network and represented by the BUIDL token, has brought about sea change.
The venture is poised to tap into a market worth $16 trillion by 2030, as institutional interest sets the stage for explosive growth. RWA, a token representing ownership of tangible assets ranging from bonds to real estate to commodities, democratizes investing and improves liquidity.
BlackRock’s funds are fully funded by cash, U.S. Treasury bonds and repurchase agreements. Other large companies, including JPMorgan, Citi, and Bank of America, are also exploring RWA technology. Currently, most RWAs are stablecoins pegged 1:1 to the US dollar.
Bitcoin Halving (April 19)
The Bitcoin blockchain will soon undergo its fourth halving, a quadrennial event that slashes block rewards. This time it will be reduced from 6.25 BTC to 3.125 BTC.
Every halving affects the profitability of Bitcoin mining, reducing inflation rates while also promoting network sustainability. The key is to cap and limit supply to 21 million BTC.
In other words, half-life does not occur in isolation. BTC price also reacts to factors other than supply, such as regulations, Federal Reserve monetary policy, geopolitics, etc.
Previous halvings (2012, 2016, 2020) have occurred amidst fundamentals that highlight Bitcoin’s strength as an alternative store of value: the EU debt crisis, the ICO boom, and pandemic-induced inflation concerns.
The main driver this time is the acceptance of spot Bitcoin ETFs. If the past repeats itself, the post-halving rally is expected to continue until late 2025. However, past performance does not indicate future results.
💡 To learn more about the coin halving behavior, check out: The Ultimate Guide to Bitcoin Halving in 2024.
More insights into EarnBIT’s social media ⬇️
Official website and platform: https://earnbit.com/