Bitcoin and Crypto Market Updates (March 27th)
Chop Chop Chop
Going to be a shorter market overview today as much hasn’t really changed from last week. We’re still seeing some key themes:
- Alt weakness with DOM moving UP
- BTC and ETH continue to chop in a brutal range
- SPX / Legacy markets still somewhat choppy
- Recession theme still making ground and continues to dominate
DOM — Weekly chart — We’re getting close to the top of the range here… So we could see Alts get a bid once this range high gets tested. But so far evidence suggests if we do get a pullback / further consolidation on BTC, Alts just bleed. However, we have to remain open so this is something to keep an eye on this week.
My nuclear outcome for Alts starts to happen IF we break out of this range. We have a huge inefficiency to fill all the way back to the 58% zone, so the range really needs focus this week.
BTC / ETH — 4H charts — Ruthless chop and insane swings as the market tries to grapple with inflation worries, and recession fears. Bank blow-ups and possible fed dovishness. Overall it feels like the market is really trying to figure out what’s going to happen next with total confusion.
SPX / Legacy — Same script with SPX lagging due to the financial exposure and things like TECH / QQQ leading the charge last week. It’s a very confusing picture but im keeping a close eye on large-cap tech this week because if these start to falter its game over for any bullish thesis and we should see the technology indexes start to break down…. Or break out further.
This week I’ll really just be focussing on the flows — So far as mentioned we have a dominant recession theme but the markets dipped in and out of this stance all year so far. We really need some definitive action and I think keeping an eye on the large caps like AAPL / MSFT
Arbitrum airdrop worth $2,850 on average
Last week we saw the long-awaited launch and airdrop of Arbitrum’s $ARB token. The average airdrop participant received around 1,900 tokens with the price hovering steadily around $1.50 for much of the weekend. Meaning the average eligible wallet received $2,850 in free airdropped tokens… incredible for a bear market. Over 85% of eligible wallets have claimed their airdrop tokens. TVL on the Arbitrum chain soared around 22% with the new liquidity. Arbitrum currently sits around a $1.6B market cap with a fully diluted valuation of over $12.7B
zkSync Era Mainnet goes live
Matter Labs, the Ethereum scaling team, has launched zkSync Era, the second iteration of their Layer 2 network, as a major milestone for Ethereum scaling. Era is a zero-knowledge rollup compatible with the Ethereum Virtual Machine. This means developers won’t have to make major changes to their code to deploy applications between zkSync Era and the Ethereum mainnet. Many of DeFi’s top dApps, including Uniswap, Curve, and MakerDAO, are already gearing up to deploy on zkSync Era. zkSync and their confirmed $ZKS token with rumours of another huge token airdrop in the future. Given their $450M+ in funding so far, this is definitely one worth using in case of any airdrop.
Do Kwon finally arrested
Do Kwon, the cryptocurrency entrepreneur behind the TerraUSD and Luna digital currencies, has been formally charged by Montenegrin police for forging official documents after being arrested at Podgorica airport. Alongside a second suspect, Kwon was charged with forging Costa Rican and Belgian passports. The two are also wanted for committing criminal acts in the economy, with an international warrant issued for their presence in court in Seoul. Kwon co-founded Terraform Labs, which developed the two digital currencies that crashed last May. The criminal case follows related civil charges against Kwon and Terraform by the US Securities and Exchange Commission last month.
FED hike rates 0.25%
The US Federal Reserve has enacted a 0.25% interest rate increase, signalling that the end of the hiking cycle is near. The FOMC’s post-meeting statement is a departure from previous statements, which indicated that “ongoing increases” were necessary to bring down inflation. While Fed Chair Jerome Powell indicated that the end of the rate-hiking cycle might be near, he stated that the fight against inflation isn’t over yet.
Polygon zkEVM Mainnet Beta
Polygon, the largest scaling solution for the Ethereum network, is set to launch its zero-knowledge Ethereum Virtual Machine (zkEVM) mainnet beta in a few hours. This launch is a significant development for web3 application developers as it increases scalability and ensures compatibility with the Ethereum Virtual Machine. Several web3 partners, including API3, ankr, Biconomy, Etherscan, and Sequence, have already joined forces with MATIC zkEVM. Additionally, Polygon’s upcoming launch has led to a rise in whale accumulation of MATIC, according to Santiment’s chart. zkEVMs are taking over!
Bitcoin, Altcoins and Stablecoins
As a cryptocurrency investor, you’re likely familiar with Bitcoin, the world’s first and most well-known cryptocurrency. However, you may have also heard about altcoins and stablecoins, all other cryptocurrencies that exist beyond Bitcoin. While Bitcoin is often seen as the king of the crypto world, altcoins and stablecoins also play significant roles in the overall cryptocurrency market.
The Relationship Between Bitcoin and Altcoin Prices
First, it’s essential to understand that Bitcoin’s dominance (BTC.D) in the crypto market has been decreasing over time. In 2017, Bitcoin accounted for more than 80% of the total cryptocurrency market cap. Today, that number has decreased to around 40%, indicating the increasing prominence of altcoins and stablecoins.
The relationship between Bitcoin and altcoin prices can be described as a seesaw effect. When Bitcoin prices rise, altcoin prices tend to fall, and vice versa. This is because Bitcoin is the most dominant cryptocurrency in terms of market cap, and investors tend to flock to it during times of uncertainty in the market. When Bitcoin prices rise, investors may sell their altcoins to invest in Bitcoin, leading to a decrease in altcoin prices. On the other hand, when Bitcoin prices fall, investors may shift their attention to altcoins, causing an increase in altcoin prices.
However, this seesaw effect is not always the case. There are times when altcoin prices may move independently of Bitcoin prices. For example, in 2017, the price of Ethereum, the second-largest cryptocurrency by market cap, surged from around $8 to over $1,400, despite a relatively stable Bitcoin price.
Here is a handy infographic with the impact on the price of altcoins, in general, depending on the fluctuation of both, BTC price and dominance.
Pro Tip: Not every altcoin will react in the same fashion, usually there are few resilient alts (aka solo runners) that might move against the global tendency.
Stablecoins and their Influence on Cryptocurrency Prices
In addition to Bitcoin and altcoins, stablecoins are also becoming increasingly relevant in the cryptocurrency market. Stablecoins are cryptocurrencies that are pegged to a stable asset, such as the US dollar, to minimize price volatility. This makes stablecoins an attractive option for investors who want to avoid the price fluctuations of other cryptocurrencies.
Stablecoins have a unique relationship with Bitcoin and altcoin prices. During times of market uncertainty, investors may shift their investments to stablecoins to avoid volatility. This can cause a decrease in Bitcoin and altcoin prices. On the other hand, when the market is stable, investors may move their investments back to Bitcoin and altcoins, potentially causing an increase in their prices.
In the same way that Bitcoin dominance (BTC.D) can be represented in a chart, the dominance of different stablecoins is also represented as a chart and could be used to determine global changes in the crypto market.
Here is the dominance of Tether (USDT.D) in green as an example with the BTC price in orange. Note how both charts seem to be opposed to each other:
In conclusion, the cryptocurrency market is a dynamic and ever-changing environment that requires investors to stay informed and adapt to market conditions. Understanding the relationship between Bitcoin, altcoin, and stablecoin prices, as well as the role of technical analysis in crypto trading, can help investors make informed decisions and potentially maximize their returns.
However, it’s crucial to remember that successful crypto trading requires a combination of technical analysis, proper execution, mindset, and risk management. By staying informed and being mindful of these factors, you can potentially achieve success in the exciting world of cryptocurrency.