7-day market recap
After a rally towards the end of last week, attention has been on Bitcoin’s inability to break through and hold above the $25,000 USD resistance zone. After five attempts, BTC has been unable to break and hold above this crucial zone (Bitcoin’s highs in August were $25,211). As a result, BTC has been moving sideways, with a lack of clear direction.
While the majors have been trending sideways for the past 5 days, there has been more excitement amongst smaller altcoins. The apparent ‘China coin’ narrative has been gaining attention, with the market appearing to have favoured AI coins, then Layer 2 scaling solutions to now Chinese-based coins. We should note that these swings on smaller market cap coins, between various categories is to be expected and following these narratives inevitably carries risk of loss when the focus category changes.
The main coins benefiting from this apparent ‘China Coin’ narrative have been Conflux (CFX), up over 500% in the last 7 days (this follows an announcement last week that the little-known altcoin is partnering with a large Chinese telecommunications). Filecoin (FIL) is another project based out of China that is up over 70% in the past week.
Co-founder of Gemini, Cameron Winklevoss, has speculated whether the next bull run will be come from Asia and the East, with less focus on the US, particularly as the SEC has begun to crack the whip on US-based crypto companies. This is mere speculation at this point, and the crypto market does not currently look like a bull run.
Market Outlook
Looking ahead we have some key US economic data due out later this week. On Thursday, we will be presented with a detailed breakdown from the latest FOMC meeting and some GDP data.
With BTC struggling to break through the $25k resistance zone, this upcoming data could be enough to kick BTC out of this sideways range, either to the upside or downside, so something to be mindful of this week.
Figure 1: Bitcoin Price Level. Source TradingView
A sign of strength will be if BTC can break and close above the August 2022 highs of $25,211. Conversely, if price continues to be rejected at the 25k zone, we could see BTC fall to the next significant weekly support level around $21,800.
Coin Watch: Filecoin (FIL)
Filecoin ($FIL) has had a cracking past week, up over 72% and has climbed the ranks to be the 25th largest cryptocurrency.
But what’s driving the recent price surge for the decentralised storage network?
Apparent ‘China Coin’ narrative
FIL has become the face of the apparent ‘China coin’ narrative currently gaining popularity within the crypto ecosystem. The key driver seems to be the Chinese economy moving back into ‘growth phase’ post Covid and Hong Kong easing crypto restrictions.
China has now lifted a lot of their previous Covid restrictions and has kicked off quantitative easing. Additionally, Hong Kong have also announced they plan to allow institutions and retail investors to buy ‘large’ cryptocurrencies from the 1st of June 2023. Speculators are hoping this move by Hong Kong could lead to mainland China eventually easing their crypto ban. However, this is mere speculation at this point.
Major upgrade – Filecoin Virtual Machine (EVM)
Filecoin also have some major fundamental upgrades on the horizon.
The Filecoin Virtual Machine (FVM) is a highly anticipated innovation for the Filecoin project. The development will introduce smart contracts to the network, empowering developers to create fully decentralised applications. This move positions Filecoin as a complete Layer-1 blockchain solution, similar to Ethereum.
The upgrade is a significant milestone for the project and is due to take place on the 14 March 2023.
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