Bitcoin consolidation continues
This is the Kvarn Pulse newsletter, which reviews current events in the cryptocurrency markets and macroeconomy.
Week by numbers
Over the past week, the crypto market has moved sideways without a clear trend. The price of Bitcoin, the largest cryptocurrency, rose by about one percent, while the price of Ether, the second-largest cryptocurrency, increased by about two percent. Meanwhile, the total market cap of the rest of the crypto market (excluding major stablecoins) declined by about one percent.
As the crypto market moved in relative sync, there were no significant changes in Bitcoin dominance or the ETH/BTC ratio.
Although the total altcoin market cap remained relatively unchanged, some individual tokens experienced notable price increases and decreases. Among the tokens traded on the Kvarn X trading platform, the biggest weekly gainers were MKR (+20%), TIA (+16%), and XRP (+10%). On the other hand, the biggest weekly losers were RAY (-12%), JTO (-10%), and ENA (-10%).
Crypto moves sideways
As the key figures of the week indicate, the crypto market as a whole has been relatively stagnant over the past week. The price of Bitcoin, the largest cryptocurrency, has remained around $95,000 with low volatility, and there have been no significant shifts between Bitcoin and the altcoin market either.
Following the past week’s developments, our outlook on the short-term future of the crypto market is currently somewhat mixed.
From a purely technical analysis perspective, the situation shows some promising signs.
When viewed on a daily chart, the price of Bitcoin, the largest cryptocurrency, is at the lower end of its recent multi-month range (1). After a couple of down days, Tuesday’s daily candle displayed a long wick, which often signals a trend reversal—in this case, a shift from decline to rise. Since Tuesday, we have indeed seen 1.5 days of solid gains. This, in turn, is reflected in the Relative Strength Index (RSI) rising above its signal line, which itself has also turned upward (3).
Technical analysis, therefore, provides reasons for optimism. So why are we still cautious despite these signals?
First, it is important to recognize that in a tight range over the past weeks, without a clear trend, signal value of various indicators naturally weakens. Additionally, different timeframes provide divergent perspectives. A one-hour interval analysis covering the past two weeks shows that we are actually at the upper end of this range and approaching the $98,000–$99,000 resistance level, which has proven formidable in recent weeks.
Stock Market on the Rise
Beyond the limitations of technical analysis, broader market conditions further justify a cautious approach regarding the sideways movement of the crypto market.
Since the correction seen in mid-January, the stock market has performed strongly. The S&P 500 index, which tracks stock market performance, has risen over five percent in just over a month, reaching new all-time highs above 6,100 points on Wednesday, February 19, 2025.
Thus, market sentiment in recent weeks has generally favored riskier assets. However, this has had little impact on cryptocurrency prices. Excluding intraday fluctuations, Bitcoin’s price has remained nearly unchanged since mid-January, even though the S&P 500 index has risen by more than five percent during that period.
In fact, over the past couple of weeks, Bitcoin’s price has even declined while the stock market has risen.
The market trends of recent weeks raise an obvious question: if Bitcoin is moving sideways while the stock market is rising, how will it react when the stock market inevitably undergoes a corrective downturn?
A crypto-optimist might argue that recent price action is simply evidence of the long-awaited weakening correlation between Bitcoin and the stock market. According to this hypothesis, if stock market gains do not clearly translate into Bitcoin price increases, perhaps stock market declines will not necessarily cause Bitcoin prices to drop either?
Anything is possible. However, at this stage, our interpretation is that Bitcoin’s stagnation, despite the stock market tailwinds, most likely reflects current weakness in the crypto market. In this situation, stock market gains are insufficient to lift Bitcoin significantly, but stock market declines are more likely to also push crypto prices downward.
At the same time, it is important to emphasize that our assessment of “crypto market weakness” is neither a final nor even a long-term view — merely a description of the current state. Given the massive Bitcoin rally seen in November, we view this as a completely natural consolidation phase.
We can try top visualize the relationship between the stock market and the crypto market by comparing Bitcoin’s dollar price with the Ultra Pro QQQ ETF (a 3x leveraged NDX index, TQQQ).
The above chart shows that immediately following the post-U.S. presidential election market rally, Bitcoin’s price surged almost vertically compared to the three-times-leveraged Nasdaq index.
It also shows that the BTCUSD/TQQQ ratio exceeded 1200. Even during the 2021 crypto boom, it did not remain at such levels for long, and since then, it has only reached these heights on isolated occasions.
With Bitcoin priced so high in relative terms, it seemed its dollar price has had somewhat limited upside potential unless either the stock market performed exceptionally well or a crypto-specific catalyst emerged to push the BTCUSD/TQQQ ratio to new heights (such as the much-discussed U.S. strategic Bitcoin reserve).
The chart also reveals that Bitcoin’s stagnation in recent weeks, despite the stock market’s rise, has brought the BTCUSD/TQQQ ratio significantly lower.
An optimistic interpretation is that this could soon create room for Bitcoin’s relative valuation to rise again. However, a necessary caveat is that typically, the BTCUSD/TQQQ ratio has found a bottom and reversed only after Bitcoin’s dollar price has first moved downward rather than turning up from a sideways trend. Although as we noted at the beginning of this analysis, anything is possible.
Finally, it is important to note that the BTCUSD/TQQQ ratio is a rather crude tool for assessing the relationship between the crypto and stock markets, and it definitely should be used with some reservations. Since TQQQ is a leveraged ETF, its price movement is influenced by volatility as well as trend direction, and it represents only a segment of the stock market. Naturally, there is no guarantee that the future development of the BTCUSD/TQQQ ratio will follow any of the historical patterns. Nonetheless, we do consider it one somewhat useful indicator among others.
With these thoughts, we leave readers to observe the intriguing situation in the crypto market. Although, according to our analysis, the crypto market has temporarily lagged behind the stock market, this very setup may present interesting opportunities in the near future.
We will continue monitoring the situation and will return next week with the Kvarn Pulse newsletter—so stay tuned!
