Kvarn X Pro Weekly Report - Week 10

Week by numbers

The last week has seen in a downtrend on the crypto market. The price of the largest cryptocurrency, bitcoin, fell by about six percent, and the price of the second largest cryptocurrency, ether, by about fourteen percent. The total value of the rest of the crypto market (excluding the largest stable coins), on the other hand, rose by about one percent.

One of the most interesting developements of the past week was, in addition to the sharp drop in the prices of the largest cryptocurrencies, the fact that at the same time the alt-coin market collectively held its ground surprisingly well. Because of this, we saw somewhat atypically both bitcoin's dollar price and bitcoin dominance falling. The ETH/BTC ratio, on the other hand, as is typical for a down week, came down sharply again, falling by almost nine percent.??

As stated above, the total value of the alt-coin market remained almost unchanged during the week. Within it, however, strong differences were seen, and individual tokens saw both strong price increases and price drops. Of the tokens of the Kvarn X trading service, the strongest weekly gainers were HBAR (+29%), ADA (+24%) and WIF (+11%). On the other hand, biggest losers were LDO (-25%), SEI (-19%) and INJ (-19%).

Market commentary

The last 1.5 weeks have been quite a rollercoaster in the crypto market. First, we saw the price of the largest cryptocurrency, bitcoin, fall from around $96,000 to around $78,000 in less than a week, then rise by twenty percent in a couple of days, and drop by more than ten percent in a day.

In alt-coins, the same type of movements were naturally seen with even greater volatility.

By slightly extending the time frame, we can more clearly see that the crypto market has been clearly in downward since the end of January. Donald Trump's announcement on social media about strategic crypto reserve of the United States was the catalyst for the price spike seen over the weekend. However, this spike was quickly sold off on Monday as the stock market started a new week with a decline.

Short-term view

In last week's Kvarn X Pro weekly report, we made two observations. First we stated:

“..we believe that Bitcoin's price between $86,000 and $89,000, observed on Tuesday, presents a relatively promising buying opportunity”

Since just five days later the bitcoin rate was at $95,000, our analysis was not completely wrong. However, to be honest, it must be stated that it cannot be considered particularly successful either, as the days following the Pro weekly report offered even better buying opportunities.

We speculated a week ago that

“It seems that the most obvious downside pressure has already been absorbed, and some short-term bounce could be likely.”

Our estimate turned out to be a few days early. This was primarily due to the fact that the stock market turned out to be clearly weaker than we expected. The S&P 500 index saw a total of six consecutive days of decline.

On Friday, February 28th, 2025, the stock market showed a strong rise after six days of decline, which led to expectation that next move could be upwards again. However, these expectations received a cold shower on Monday, March 3, 2025, as with the latest news on tariffs, the S&P 500 again fell by almost two percent.

With this back and forth, market is again in the same situation as last Thursday. After a strong drop, it looks like in the short term from oversold, but on the other hand there are no signs of an upward turn yet. So we assume again that there would be limited room for a further decline, and more room for upside than downside.

What would a possible reversal in the stock market mean for cryptocurrency prices?

In principle, the upward direction of stocks is naturally a positive condition for cryptocurrency rates. However, we would be wise to pay attention to the fact, that in the most recent upward movement of the stock market during the first three weeks of February even the tailwinds from the stock market were not enough to raise the bitcoin price, but only to keep it moving sideways. The reversal of the stock market, on the other hand, triggered a sharp drop in the bitcoin price.

Because of this latest example, we view also the possible next uptrend in the stock market with rather cautious expectations regarding the crypto market. We consider it quite possible that the rise of the stock market would again be not enough to do more than keep the crypto market in sideways movement after last week's sharp price drop.

A counterargument for this caution, however, could be that the crypto market would be starting the possible next uptrend of the stock market from clearly lower valuation levels than it did last time. When the stock market was last time at this same level, the price of bitcoin was over $96,000, while it is now around $86,000.

At the time, $96,000 was hardly a particularly attractive buying opportunity for many, because we had just seen bitcoin price face significant resistance immediately above $100,000. Now, with the rate at $86,000, it is at least possible to see clearly more upside potential.

In summary, however, we state that the stock market uptrend is still speculation at this stage, and there is yet no concrete evidence that it has started. Even if this upward movement was to materialize, it is not quite obvious that it would mean significant price increases for cryptocurrencies. Based on these findings we keep our short-term expectations to be quite modest, but of course we encourage traders to monitor the situation closely.

Longer-term view

In our Kvarn X Pro weekly report last week, we also presented an assessment from a longer-term perspective. We wrote at the time:

“In the longer term, we believe $90,000 level to be crucial. If Bitcoin fails to reclaim it as a support level—or worse, if it starts acting as resistance—it may be necessary to analyze the stage of the market cycle and the potential for a new bear market."

We still think this interpretation is worth keeping an eye on. It is true that on Sunday, March 2, 2025, the bitcoin price clearly exceeded the $90,000 level. However, this happened during the weekend, when the stock market is closed and the liquidity of the crypto market is thinner. After the start of the new week in stock market, the bitcoin price returned below 90,000 dollars very quickly.

We believe that marked on the attached graph trendline is relatively informative. Until it breaks, we keep our expectations quite modest and take seriously the possibility that the crypto market could already have reached a market top.

During the last week, this hypothesis gained some further support, as? Nasdaq Composite Index fell outside the range in which it had stayed for last three months.

For Nasdaq, the next area of interest is the local low before the US presidential election, at around 18,000 points, at the moment about 2 percent away. Breaking below this level would force us to consider more seriously the possibility of the bull market coming to an end.?

However, if one believes in the continuation of the bull market, technology stocks could seem to be in an excellent buying area. If one believes this, the current price of bitcoin at $83,000 could also appear to be a rather attractive place to buy. With these thoughts, we leave the reader to follow the interesting situation of the crypto market after the rollercoaster of the last week.

We'll be back again next week with the Kvarn X Pro weekly report, so stay tuned!