Digital Assets Morning Call: March 30, 2022

Written by Robert Lynch
on March 30, 2022

Bitcoin and Ethereum consolidate recent gains

US authorities monitor crypto to ensure Russia sanctions compliance

Yield curve inversion highlights future growth risks

Price action in bitcoin and Ethereum has turned more consolidative at mid-week but importantly, both coins have thus far retained the bulk of the gains registered since mid-March.

Bitcoin has tested but not yet made a convincing break of its 200-day moving average, currently at $48,310 and after its sizeable rally from mid-March that may prove formidable resistance in the near-term. Support from the hourly trendline drawn off the mid-March low is at $44,500, well below current spot levels of $47,280.

Short-term support for Ethereum is found near $3,300, defined by the uptrend off the hourly chart drawn off the March 15 low. Potentially formidable resistance is at the $3,500 area, defined by the 200-day moving average and the 50% retracement of the $4,867-$2,159 November-January decline.

Officials step of monitoring of crypto markets in light of Russian sanctions

On Tuesday a US Treasury official noted that they are monitoring markets, including crypto exchanges, for any signs that Russia is attempting to evade sanctions. It should come as no surprise that US and global authorities are taking measures to ensure sanctions are enforced, including stepped up surveillance. Similarly, those impacted by the sanctions will try to sidestep them. For crypto markets, perhaps the current takeaway is that scrutiny has not turned up illicit activity nor has the threat of enhanced monitoring put any obvious pressure on crypto prices.

Signals from US yield curve inversion

The brief inversion of the US 2yr-10yr yield on Tuesday continues to draw a great deal of market focus given its notoriety as a predictor of future recession. Those risks should not be dismissed and in fact a number of economists and market commentators have highlighted some increased risk of a US recession given the combination anticipated Fed tightening, the ripple effects of the war in Ukraine, the tax of higher commodity prices and the significant falloff in US fiscal stimulus relative to 2021.

That said, the broad consensus is that the US will avoid recession, but that growth will likely slow considerably from the 2021 pace. Other things being equal, slower economic growth will create more headwinds for financial assets broadly, including crypto. In that regard it is important to monitor upcoming economic signals, and the US labor market data due this Friday will be an important data point.


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Robert Lynch

Robert Lynch

Head of Research and Strategy | Robert Lynch is an experienced financial market strategist, focusing on macro markets including currencies, interest rates, commodities and cryptocurrencies. He is trained and practiced in the analysis of economic developments, monetary and fiscal policy, political events and technical indicators in order to generate actionable investment solutions.