Monthly Update March | Is Bitcoin under pressure?
Every month, we update you on the biggest happenings in the crypto market. This time, we're focusing on the three largest coins: Bitcoin, XRP, and Ethereum. What exactly is going on within these networks?
Forthcoming Import Tariffs In the United States, there are fears about the consequences of the current trade war. President Trump has introduced import tariffs on certain products coming from Canada, Mexico, China, and now Europe as well. As a result, these countries are now also imposing tariffs on American products, making many goods more expensive for consumers. Trump made an announcement about new tariffs on the 2nd of April, causing many exchange rates to fall sharply, including that of Bitcoin.
Influences from the United States
Besides the import tariffs, there are other things happening in America that are affecting the Bitcoin price. One of these factors is inflation. Because prices in both the US (2.5% in February) and the Eurozone (2.2% in March) aren't rising sharply, inflation is less severe than expected, and investors are less inclined to buy Bitcoin as a way to protect their money.
Furthermore, interest rates on short-term US government loans have fallen to 3.88%. This means that people lending money to the government are receiving less interest, so they prefer to store their money safely elsewhere. This uncertainty makes people less likely to buy risky assets like Bitcoin and more inclined to invest in safer havens. One of these havens is gold, which has reached new record highs in the past month.
Institutional investments
While private investors are being somewhat more cautious during this period, there are major players who are investing heavily in Bitcoin. Besides MicroStrategy, which has been investing millions in the coin for several months, GameStop has now also announced its intention to add BTC to their financial strategy.
These kinds of steps show that companies are increasingly viewing Bitcoin as a valuable addition to their financial reserves. Analysts believe that these investments in Bitcoin are precisely what kept the price above $80,000 this month.
The Bitcoin ETFs saw a higher inflow than outflow this month for the first time in a few weeks, after a period of consistently higher outflows. The Blackrock ETF, in particular, accounted for $170 million in inflows, giving it a 47% share of the total Bitcoin ETF market. So, there's still significant investment in Bitcoin.
MicroStrategy now even holds 2.4% of the total Bitcoin supply. The question here is whether it's a positive development that Bitcoin is mainly being bought by large investors or companies; while on the one hand this clearly indicates a high level of confidence in the coin, on the other hand it leads to a concentration of the Bitcoin supply, which could undermine its decentralisation.
Ripple Lawsuit Against SEC Concluded
One of the significant factors in the movements of the XRP price is the ongoing lawsuit between Ripple and the SEC, the American Securities and Exchange Commission. This lawsuit began in 2020. In short, Ripple was accused of selling unregistered securities through the issuance of XRP tokens, as the SEC views XRP as a security, similar to stocks or bonds. Ultimately, Ripple was fined, and the SEC filed another appeal.
With the resignation of Chairman Gary Gensler, this lawsuit has come to an end. Gensler was not a proponent of cryptocurrencies and had initiated several cases. This month, his successor, Paul Atkins, became the new Chairman of the SEC. Appointed by Trump, he holds a much more positive view of the crypto market. Consequently, he has withdrawn the charges against Ripple.
This was expected to have a huge effect on the price; XRP indeed surged by 10% following the news on 19th March. However, the price has since fallen by 20% in the past two weeks, dropping from $2.55 to $2.03. The sentiment appears bearish at the moment: based on the derivatives market, more short positions are being taken out betting on a price decrease than long positions betting on a price increase. So, investors don't foresee any major developments in the XRP price in the short term.
Sentiment Remains Positive
In the long term, there's a generally bullish outlook on the price. For instance, the end of the lawsuit has now paved the way for an XRP ETF, which previously seemed unlikely. Several applications for this have already been submitted. The SEC is taking its time to review these (up to 240 days), so they won't be approved quickly, but with the new chairman, the chances are higher. CoinShares, Canary Capital, and WisdomTree are already awaiting approval for their XRP ETF applications.
Since Trump took office, more altcoin ETFs have been applied for. The President has even indicated a desire to establish a crypto reserve, including Bitcoin, Ethereum, and XRP. This could also contribute to a stable growth in the XRP price. However, Trump has said little about this since that statement, so the timeline for such a reserve is uncertain.
Looking at the price chart, some analysts are identifying interesting patterns that could indicate an increase. Some suggest that XRP could soon reach $6. A breakthrough above $2.20, for example, could be the starting gun for a new upward wave, as long as the price stays above $2. However, it remains difficult to predict, as many more developments from the United States are likely to follow.
Too Few Developers
The Ethereum network has been grappling with a shortage of new developers and projects for some time, partly due to high operational costs. Analysts suggest that these costs are discouraging developers from building on the Ethereum network. As a result of limited development activity, ETH is already underperforming, while other blockchains are experiencing more development.
Furthermore, there has been a significant outflow from Ethereum ETFs. For weeks, more ETH funds have been withdrawn than invested. This development is also not helping Ethereum's recovery. Additionally, there are claims of declining confidence in Ethereum's governance, which is said to comprise fewer technical developers and more influencers. The constant decline is also leading to growing uncertainty surrounding the coin, seemingly pushing it into a downward spiral. Nevertheless, there are also bullish signals to note.
Positive Signals
Ethereum still remains dominant in the DeFi world. The project still ranks in the top 3 when it comes to volume and market capitalisation. In a single week, $20.5 billion worth of transactions took place. In comparison, Solana saw $13.9 billion in transactions during the same period.
Moreover, an increasing amount of money is being locked into Ethereum's digital contracts, or the Total Value Locked (TVL). It's now higher than ever since July 2022, standing at 24 million ETH. This is primarily due to the increase in liquid staking, yield farming, and the tokenisation of real-world assets.
Large investors are also finding Ethereum increasingly interesting. Already, $8.9 billion is locked in Ethereum ETFs. This is an advantage for Ethereum, as blockchains like Solana do not yet have these. Banks also state that Ethereum maintains a strong position as an infrastructure layer.
A major advantage for Ethereum is the adoption of Layer 2 solutions. Layer-2 solutions such as Arbitrum, Optimism, Base, ZKsync, and Blast are driving a huge increase in network activity. Partly due to this, many analysts remain positive about Ethereum's future and anticipate a price increase will still occur.
March puts Bitcoin under pressure
March saw plenty of political developments, which meant Bitcoin continued to struggle. At the start of March, the first American crypto summit, led by Trump, took place. While March began with a hopeful jump to $94,000, it's been downhill ever since. The Bitcoin price is clearly under pressure, and this is due to several factors.Forthcoming Import Tariffs In the United States, there are fears about the consequences of the current trade war. President Trump has introduced import tariffs on certain products coming from Canada, Mexico, China, and now Europe as well. As a result, these countries are now also imposing tariffs on American products, making many goods more expensive for consumers. Trump made an announcement about new tariffs on the 2nd of April, causing many exchange rates to fall sharply, including that of Bitcoin.
Influences from the United States
Besides the import tariffs, there are other things happening in America that are affecting the Bitcoin price. One of these factors is inflation. Because prices in both the US (2.5% in February) and the Eurozone (2.2% in March) aren't rising sharply, inflation is less severe than expected, and investors are less inclined to buy Bitcoin as a way to protect their money.
Furthermore, interest rates on short-term US government loans have fallen to 3.88%. This means that people lending money to the government are receiving less interest, so they prefer to store their money safely elsewhere. This uncertainty makes people less likely to buy risky assets like Bitcoin and more inclined to invest in safer havens. One of these havens is gold, which has reached new record highs in the past month.
Institutional investments
While private investors are being somewhat more cautious during this period, there are major players who are investing heavily in Bitcoin. Besides MicroStrategy, which has been investing millions in the coin for several months, GameStop has now also announced its intention to add BTC to their financial strategy.
These kinds of steps show that companies are increasingly viewing Bitcoin as a valuable addition to their financial reserves. Analysts believe that these investments in Bitcoin are precisely what kept the price above $80,000 this month.
The Bitcoin ETFs saw a higher inflow than outflow this month for the first time in a few weeks, after a period of consistently higher outflows. The Blackrock ETF, in particular, accounted for $170 million in inflows, giving it a 47% share of the total Bitcoin ETF market. So, there's still significant investment in Bitcoin.
MicroStrategy now even holds 2.4% of the total Bitcoin supply. The question here is whether it's a positive development that Bitcoin is mainly being bought by large investors or companies; while on the one hand this clearly indicates a high level of confidence in the coin, on the other hand it leads to a concentration of the Bitcoin supply, which could undermine its decentralisation.
Is XRP ready for a new rally?
At the moment, investors are paying close attention to the price of XRP. Developments in the United States are influencing the entire economy, which is also reflected in XRP. The price is in a consolidation phase and has also fallen below the $2 support level. What has happened, and where could the price be headed?With the resignation of Chairman Gary Gensler, this lawsuit has come to an end. Gensler was not a proponent of cryptocurrencies and had initiated several cases. This month, his successor, Paul Atkins, became the new Chairman of the SEC. Appointed by Trump, he holds a much more positive view of the crypto market. Consequently, he has withdrawn the charges against Ripple.
This was expected to have a huge effect on the price; XRP indeed surged by 10% following the news on 19th March. However, the price has since fallen by 20% in the past two weeks, dropping from $2.55 to $2.03. The sentiment appears bearish at the moment: based on the derivatives market, more short positions are being taken out betting on a price decrease than long positions betting on a price increase. So, investors don't foresee any major developments in the XRP price in the short term.
Sentiment Remains Positive
In the long term, there's a generally bullish outlook on the price. For instance, the end of the lawsuit has now paved the way for an XRP ETF, which previously seemed unlikely. Several applications for this have already been submitted. The SEC is taking its time to review these (up to 240 days), so they won't be approved quickly, but with the new chairman, the chances are higher. CoinShares, Canary Capital, and WisdomTree are already awaiting approval for their XRP ETF applications.
Since Trump took office, more altcoin ETFs have been applied for. The President has even indicated a desire to establish a crypto reserve, including Bitcoin, Ethereum, and XRP. This could also contribute to a stable growth in the XRP price. However, Trump has said little about this since that statement, so the timeline for such a reserve is uncertain.
Looking at the price chart, some analysts are identifying interesting patterns that could indicate an increase. Some suggest that XRP could soon reach $6. A breakthrough above $2.20, for example, could be the starting gun for a new upward wave, as long as the price stays above $2. However, it remains difficult to predict, as many more developments from the United States are likely to follow.
What is happening with Ethereum?
Ethereum (ETH) is clearly going through a difficult period: the coin has been in significant decline for three months now. Having reached a peak of $4100 at the end of last year, it has since fallen by 53%. This drop is partly attributable to the uncertainty surrounding import tariffs, but there are naturally other factors at play.Too Few Developers
The Ethereum network has been grappling with a shortage of new developers and projects for some time, partly due to high operational costs. Analysts suggest that these costs are discouraging developers from building on the Ethereum network. As a result of limited development activity, ETH is already underperforming, while other blockchains are experiencing more development.
Furthermore, there has been a significant outflow from Ethereum ETFs. For weeks, more ETH funds have been withdrawn than invested. This development is also not helping Ethereum's recovery. Additionally, there are claims of declining confidence in Ethereum's governance, which is said to comprise fewer technical developers and more influencers. The constant decline is also leading to growing uncertainty surrounding the coin, seemingly pushing it into a downward spiral. Nevertheless, there are also bullish signals to note.
Positive Signals
Ethereum still remains dominant in the DeFi world. The project still ranks in the top 3 when it comes to volume and market capitalisation. In a single week, $20.5 billion worth of transactions took place. In comparison, Solana saw $13.9 billion in transactions during the same period.
Moreover, an increasing amount of money is being locked into Ethereum's digital contracts, or the Total Value Locked (TVL). It's now higher than ever since July 2022, standing at 24 million ETH. This is primarily due to the increase in liquid staking, yield farming, and the tokenisation of real-world assets.
Large investors are also finding Ethereum increasingly interesting. Already, $8.9 billion is locked in Ethereum ETFs. This is an advantage for Ethereum, as blockchains like Solana do not yet have these. Banks also state that Ethereum maintains a strong position as an infrastructure layer.
A major advantage for Ethereum is the adoption of Layer 2 solutions. Layer-2 solutions such as Arbitrum, Optimism, Base, ZKsync, and Blast are driving a huge increase in network activity. Partly due to this, many analysts remain positive about Ethereum's future and anticipate a price increase will still occur.