What Happened in the Crypto Markets This Week? Bitcoin, Ethereum, and DeFi?

What Happened in the Crypto Markets This Week? Bitcoin, Ethereum, and DeFi?

This week has seen consistent gains for Bitcoin and Ether. Is a reversal on the way?

Bitcoin appears to be on the mend after a sharp drop at the end of last week.

The sell-off started on Thursday, March 28th. Bitcoin had peaked at just over $57K the day before, but by the end of the day on Thursday, the price had dropped to nearly $51K. A number of analysts noted that the correction was especially surprising given the record amount of options expiry on Friday, March 29th.

Many analysts questioned whether BTC was at the start of a larger bear cycle as a result of the price correction. However, since the price of Bitcoin bottomed out last Thursday, it has been steadily rising. The recent announcements by Visa and PayPal to further integrate themselves into the crypto world appear to have bolstered the rise.

The big question on everyone's mind right now is what will happen in the next month. Will Bitcoin be able to reclaim $60k and beyond? Is another drop in the cards before Bitcoin can regain its footing?

Throughout 2021, Bitcoin has been bolstered by positive news.

Doug Schwenk, chairman of Digital Assets Research (DAR), told us that he believes Bitcoin has more room to rise before another correction.

“BTC has just recovered from $51k around option expirations a week ago to approach the $60k level,” he told us. “Given the rate of recovery, there are clearly strong price tailwinds.”

What is causing these powerful tailwinds? In addition to the recent PayPal and Visa news, Doug stated that “we continue to see positive news in institutional adoption, such as Goldman Sachs plans to offer to wealth clients and continued ETF filings and approvals in Canada and Brazil, as well as filings in the United States.”

“It's easy to imagine BTC breaking the psychological $60k barrier and moving higher if mostly positive news continues,” he said.

Markets could benefit from positive regulatory news in the United States outside of the world of institutional investors. “The entire industry is waiting to hear what Gary Gensler, the new SEC chair, and the other new regulators at the CFTC and OCC will say about clarity and support,” Doug said.

This excitement, however, could backfire: “any comments that appear negative could easily drag BTC back in the short term, as could positive progress on a Central Bank Digital Currency (CBDC).”

Bitcoin is being amassed by large institutions at an unprecedented rate.

Even if a short-term pullback is possible, Justin Hartzman, CEO and Co-Founder of CoinSmart, told us that “analysts have been calling for much higher prices this year.”

“I believe that as more institutions enter the market and inflation as a result of money printing around the world increases, the mass market will become more interested in cryptocurrency. “From there, it's just a matter of supply and demand,” he explained.

Indeed, as COVID stimulus relief in the United States continues, the USD's status as the world's default currency may be eroding. While there is still some debate over whether Bitcoin is a true “hedge against inflation,” the fact that more investors–particularly those of the institutional variety–are buying and hoarding more BTC than ever before is encouraging.

According to Marcin Kolago, CEO and Founder of Coinerro, “a significant amount of Bitcoins is regularly removed from the market.” In other words, it appears that an increasing number of investors are purchasing Bitcoin and then storing it in "cold storage," making it more difficult to sell.

“Such accumulation is an argument that we are far from a market crash, because such crashes are preceded by more liquidity flowing into the market from long-term hodlers,” Kolago explained.

How will Bitcoin's famed volatility be affected as more institutions accumulate it?

Kolago also stated that if the trend of large-scale accumulation continues, there may be a fundamental shift in the way Bitcoin operates in cryptocurrency markets.

“It will be interesting to see if Bitcoin's volatility continues in the future,” he said, referring to this “unprecedented corporate accumulation.”

“While previous peaks and crashes were heavily influenced by retail runs and panic,” he said, “it remains to be seen if corporate holders react to market developments in a less emotional manner.” “Corporate Bitcoin ownership has reduced overall market leverage, which has already increased stability.”

ETH is on its way to a new all-time high.

Other cryptocurrencies appear to be riding along a bullish trend as Bitcoin continues to stabilise above $50K.

Ether (ETH), the native token of the Ethereum blockchain, was closing in on its previous all-time high of $2,036 at press time, with a price of $1,998.