Market Wrap: Bitcoin and Stocks Rise, Signaling Greater Investor Appetite for Risk

Bitcoin and other cryptocurrencies advanced on Wednesday, reversing an earlier pullback. Stocks were also higher, partly due to the decline in Treasury bond yields.

BTC spot trading volume is starting to tick higher, albeit below January highs, according to CoinDesk data. Some analysts prefer to see a sustained rise in trading volume to confirm the recent bounce in crypto prices.

"Prior cycle majors (ETC, XRP, LTC and EOS) and meme coins (DOGE, SHIB) have been significant gainers in the last 24 hours, potentially signaling the market's risk-on appetite," FundStrat, a global advisory firm, wrote in a Wednesday briefing.

Still, futures market data continues to suggest a neutral/bearish bias among traders. That means "markets could remain indecisive about the next momentum-driven move, at least for the short term," FundStrat wrote.

Technical indicators have improved over the past few days, suggesting a strong buying zone between $40,000 and $46,000. Over the long term, however, buying activity could wane until momentum signals turn positive.

Latest prices

●Bitcoin BTC$90,091.95: $44739, +1.07%

●Ether ETH$3,109.93: $3258, +4.37%

●S&P 500 daily close: $4587, +1.45%

●Gold: $1834 per troy ounce, +0.38%

●Ten-year Treasury yield daily close: 1.93%

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.

In other news, BlackRock, the world’s largest asset manager, is preparing to offer a cryptocurrency trading service to its investor clients, sources say. Clients could include public pension funds, endowments and sovereign wealth funds that currently trade traditional assets through BlackRock's integrated investment management platform.

BlackRock's potential crypto plans could signal rising demand for digital asset trading among large investors.

But regulatory issues remain, which could stall the pace of institutional crypto adoption. On Tuesday, Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam asked the U.S. Congress to provide his agency with an additional $100 million so it can properly oversee crypto markets.

Keep an eye on trading activity

The chart below shows a gradual decrease in the total volume of buy orders filled by takers in BTC perpetual swaps, a type of derivative product in the crypto market, similar to traditional futures.

High values in buy volume indicate short-term buying pressure and high investor attention, according to CryptoQuant, a crypto data firm. Buying volume ticked lower over the past 24 hours and has not kept up with the recent bounce in BTC's spot price, which could indicate caution among derivative traders.

Still, other indicators such as open interest and buy volume versus sell volume have improved over the past week, which typically signals bullish sentiment in the crypto market.

"Limited liquidity may have contributed to the rising bitcoin price as outsized buying orders in thin order books tend to push up prices," Arcane Research wrote in a report this week. Therefore, even if trading volumes rise, there needs to be enough buying power to sustain BTC's price recovery.

Altcoin roundup

• Shiba inu enters metaverse with 'Shiba Lands’: Developers behind popular meme coin shiba inu said the protocol would soon offer plots of virtual lands in an upcoming, yet-unnamed metaverse, causing the prices of ecosystem tokens such as SHIB and LEASH to jump as much as 40%, according to Shaurya Malwa. Read more here.
• Washington Nationals to ‘explore’ Terra’s UST stablecoin: The Washington Nationals baseball team said Wednesday it will “explore” in-stadium payments of Terra’s UST stablecoin as part of a nearly $40 million sponsorship. The thrust of that deal centers on exclusive seating naming rights. For the next five years, the ballpark’s home plate VIP lounge will be called “The Terra Club” and feature crypto branding prominently, according to CoinDesk’s Danny Nelson. Read more here.
• Solana ecosystem index SOLI launched: Amun, a provider of crypto index products, launched the solana ecosystem index token (SOLI), a single token that tracks Solana ecosystem projects and provides exposure to five highly liquid, Solana-centric assets. The SOLI composition was made based on average market capitalization and decentralized exchange (DEX) liquidity, according to CoinDesk’s Shaurya Malwa. Read more here.

Relevant news

• IMF Chief Touts Advantages of CBDCs Over ‘Unbacked Crypto Assets’ and Stablecoins
• BlackRock Planning to Offer Crypto Trading, Sources Say
• Crypto Advocates Push Back on Sweden’s Call for EU Mining Ban
• El Salvador Bitcoin Bond Issuance Coming as Soon as March 15: Finance Minister
• Twitter Joins $20M Funding Round for Bitcoin Payments Provider OpenNode

Other markets

Digital assets in the CoinDesk 20 ended the day higher.

Largest gainers:

Asset Ticker Returns Sector Ethereum Classic ETC +9.4% Smart Contract Platform XRP XRP +5.0% Currency Litecoin LTC +4.6% Currency

There were no losers in the CoinDesk 20 on Wednesday.

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.