Divergent Market Sentiment and Unfulfilled Regulatory Optimism: The Lack of Clear Catalysts Keeps Bulls and Bears in a Tug-of-War

Weak Trends and Increased Volatility in Cryptocurrency Market

Over the past week, the cryptocurrency market has shown weak trends with increased volatility. On one hand, the regulatory environment has released positive signals, with the U.S. SEC withdrawing its lawsuit against Ripple and Trump reaffirming his determination to establish the U.S. as a “crypto capital,” boosting short-term market sentiment. Meanwhile, uncertainty in the macroeconomic landscape continues to overshadow the overall trend, with U.S. CPI data and the Federal Reserve’s (Fed) interest rate policy becoming the market’s focus.

Bitcoin’s price rebounded to $86,000 in response to positive news but subsequently fell back to around $84,000, representing a decline of more than 20% compared to its peak earlier this year. With the SEC’s lawsuit withdrawal, Trump’s supportive comments, and ETF capital outflows alongside emerging technical pressures, the overall market has entered a phase of uncertainty where both policies and capital directions remain unclear. Investors are faced with dual signals of “easing regulation” and “capital withdrawal for observation,” leading to a lack of clear direction in the short term.

U.S. Regulatory Movements: Positive Signals from SEC and Trump Policies

Regarding regulatory policies, the U.S. Securities and Exchange Commission (SEC) recently announced the formal withdrawal of its lawsuit against Ripple, which originally accused the company of conducting unregistered securities offerings through XRP tokens. Following this announcement, the price of Ripple surged by 13.73%. The market widely interprets this action as a significant shift in regulatory stance, positively affecting the overall cryptocurrency market.

The SEC also held its first public roundtable meeting of the cryptocurrency working group to discuss the applicability of securities laws to digital assets, signaling potential reforms in the regulatory framework that balance protection and innovation. The market generally views this as a potential long-term positive development. Meanwhile, at the Blockworks Digital Asset Summit, former U.S. President Trump stated in a pre-recorded speech that he would strive to make the U.S. the “global crypto capital” and plans to promote stablecoin legislation and market structure reform. He criticized the current administration for stifling innovation and promised to provide a clear regulatory pathway. This statement briefly drove Bitcoin’s rebound by over 3% on that day; however, due to the lack of specific details, the market returned to observing fundamentals and macro policies afterwards. Additionally, Canary Capital announced the submission of an application for a Sui spot ETF, seen as a continuation of positive regulatory trends.

Fed’s Shift Imminent, Conservative Capital Responses: Market Remains Cautious

On the macroeconomic data front, the upcoming U.S. inflation data (CPI) and the Fed’s decision at the March policy meeting are key factors influencing the market. If the inflation data slows down, it could strengthen market expectations for Fed interest rate cuts, thereby boosting cryptocurrency performance. Conversely, if the data still indicates inflationary pressures, the market may face selling pressure again.

On the other hand, BitMEX founder Arthur Hayes pointed out that Fed Chair Powell hinted that quantitative tightening (QT) might end on April 1. If quantitative easing (QE) is restarted and the supplementary leverage ratio (SLR) regulations are relaxed, it would help create a looser capital environment. He believes that the $77,000 level previously reached by Bitcoin may constitute a short-term bottom. Although the market has not fully concluded its sell-off, Hayes observes that the “U.S. bank credit supply index” has begun to rise, potentially providing support for a rebound. Additionally, Trump’s recent hints at possibly reimposing tariffs on China have raised market concerns over potential trade conflicts. Historical experience shows that during periods of heightened geopolitical risks, cryptocurrencies are occasionally viewed as “safe-haven assets,” but more often, due to their volatility and capital flow characteristics, they remain risk assets and are easily impacted.

Market Structure and Sentiment Observation: Capital Flow, Technical Trends, and On-chain Changes

Although regulatory policies and macroeconomic data seem to be warming up, recent market sentiment shows divergence based on on-chain data. On one hand, according to predictive markets like Polymarket, many investors remain optimistic that Bitcoin could break through $100,000 in the future. On the other hand, ETF capital has recently seen net outflows, indicating a more conservative attitude from institutional investors.

According to SoSoValue data, as of the week ending March 21, net outflows from U.S. Bitcoin spot ETFs reached $798 million, marking the largest single-week outflow since the beginning of the year. Among them, Fidelity (FBTC) saw outflows of $201 million, while Ark (ARKB) experienced outflows of $164 million, primarily due to some hedge funds concluding arbitrage operations and shifting to a wait-and-see approach.

From a technical analysis perspective, the technical indicators show a range-consolidation pattern. If the price cannot effectively break through the $86,000 resistance level, short-term momentum may remain insufficient. On-chain data indicates that as of the third week of March, the holding ratio of long-term holders (LTH) remains at a high level of 70%, demonstrating market confidence in the medium to long-term trends. Meanwhile, increased activity from short-term holders and capital moving out of exchanges also reflects that some funds have chosen to withdraw for observation or shift towards cold wallet allocations.

The price of Ethereum, on the other hand, remains relatively stable, currently standing firm at the $1,900 level, with on-chain applications still active, making it one of the more favored targets amidst market fluctuations.

Overall, the cryptocurrency market is still in a transitional phase, characterized by the interplay of positive regulatory signals and macroeconomic uncertainties. In the short term, the market remains highly sensitive to inflation and Fed policies, with capital flows and technical indicators showing that most investors are adopting a wait-and-see attitude. If there is a clear shift in policies and capital directions, it may serve as an opportunity for the next phase of the market to commence. Due to increasing price volatility, investors are advised to respond conservatively and choose the right timing to enter the market.

About BingX

BingX, established in 2018, is a leading global cryptocurrency exchange providing diverse products and services, including spot trading, derivatives, copy trading, and asset management, to over 10 million users worldwide. In response to market demands, it regularly offers historical price trends for mainstream coins such as Bitcoin and Ethereum, catering to different levels of needs from beginners to professionals. BingX is committed to providing a reliable platform that equips users with innovative tools and features to enhance their trading capabilities. In 2024, BingX proudly became the main partner of Chelsea Football Club, marking its first exciting appearance in the sports world.

Disclaimer

This article reflects the views of BingX and provides market information. All content and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and trades; the author and BingX bear no responsibility for any direct or indirect losses resulting from investors’ trading activities.

Risk Warning

Investing in cryptocurrencies involves high risks, and their prices can be highly volatile, potentially leading to the loss of all principal. Please assess the risks carefully.