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Market overview 1/18: The downtrend shows no signs of ending

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Bitcoin’s price returned to where it started after a brief move up. Hence, there is no end in sight for the current downtrend. High inflation prints make everyone worried. Cardano’s ADA token woke up and rallied. Dogecoin was boosted by an Elon Musk tweet. Fantom is making a move in the DeFi sector.

Bitcoin couldn’t rally without the stock market

Bitcoin’s price is $42,000 at the time of writing this article. The number was almost exactly the same a week ago. Unfortunately, the past week has been uneventful again.

The graph below shows Bitcoin’s price development in previous months. One candle represents one day. The blue line is the 50-day moving average while the purple one represents the 200-day moving average.

btc-180122

Bitcoin’s price is still clearly below the 50- and 200-day moving averages. We also witnessed the death cross materialize a few days ago. This is a bear market signal which forms when the 50-day moving average crosses the 200-day moving average downwards.

There was also a death cross in crypto last summer. Back then, the market kept going down for about five weeks. This is another signal that the crypto market might be going lower for an extended period. We have been quite negative about the current trend and one shouldn’t expect a quick turn anytime soon.

Bitcoin’s price went briefly above $44,000 halfway last week. This was because the U.S. inflation numbers were released. Even if seven percent CPI was a new record and the highest print since the 1980s, that was exactly where investors were expecting. It gave a momentary boost, which died off quickly.

We have written about high inflation in the previous weeks. It is a risk for both equity and crypto markets because high inflation forces central banks to tighten the monetary policy. High inflation is not good for Bitcoin or gold, even if one might think so.

Analysts are currently searching for bottom signals from the market. At the moment it seems that the floor around $39,000-$40,000 is holding. A major dip below this level would be a surprise.

Even if there are bottom signals, be careful. The market is evolving every day and historical events are no proof of future ones. We saw this very well at the end of 2021 when the four-year cycle theory of Bitcoin was crushed.

The tweet above is one example of data which is pointing out that Bitcoin is in a historical dip.

Mayer Multiple is a simple indicator. It describes the ratio between the Bitcoin price and the 200-day moving average. The MM value is currently 0.86. In other words, when Bitcoin’s price is clearly below the 200-day moving average, it is a good buying opportunity.

There are cheap coins available for patient long-term investors. Those who are stressed about short-term price movements should hold their nerves. We should now let the market show where it’s heading next. This turbulent atmosphere might be around the crypto market for weeks or even months and we can’t rule out a further move down either.

Bitcoin’s dominance moving up and down

Bitcoin’s market share (a.k.a dominance) is currently at 40.07 percent. The number was 40.56 percent a week ago which translates to a drop of half a percentage point.

cryptocap-180122

Bitcoin’s dominance moved above 41 percent supported by the price move. Once Bitcoin’s price started to fall, the dominance fell with it and altcoins took over. Bitcoin’s market share fell all the way to 39.2% at the end of the week. It has climbed back almost a full percentage point.

Once more the dominance found support around 39 percent. Bitcoin’s market share has touched this level four times since 2021. Of course, it is not a tradeable asset, so these percentages and graphics are mostly for entertainment use. It’s still interesting to see how the trend changes at the same percentage levels.

Cardano’s ADA token made a move

Since Bitcoin’s dominance is falling, most of the altcoins show green colors. There are a couple of bigger moves in the top 15 rankings, but mostly it’s just marginal changes.

The image below shows the top 15 cryptos and their performance against Bitcoin in 24h / 7d / 30d time frames.

altcoins-180122

The coin that really stands out is Cardano’s ADA token. It has been in a downfall since last September when Cardano enabled smart contracts after years of waiting. Now the Dapp ecosystem is growing nicely. ADA has been boosted by Dapp launches, which we wrote about in detail in the latest news overview.

The second winner is Dogecoin. The most popular meme coin got a price boost for the same reason as before: Elon Musk.

As it says in the tweet above, Tesla approved Dogecoin as an official payment method. This means certain merch is priced in DOGE in the Tesla Store. The Cyberwhistle is one example. The price boost was quite mild in the end when comparing how DOGE was moving in 2021.

There are quite a few coins in the top 100 that have moved more than 10 percent against Bitcoin. We haven’t seen anything major, though.

One project worth mentioning is Chainlink. The LINK token was one of the hottest coins right after the New Year. Last week it crashed more than 15% against Bitcoin. LINK has given up about half of the 2022 gains at this point ($19.6 -> $28.5 > $23.2).

The DeFi sector is dominated by Curve

The DeFi sector has slowed down with the rest of the market since mid-November. Total Value Locked, which describes the liquidity of the sector, has gone sideways or slowly down for two months now. Today’s figure is slightly above last week, but nothing has really happened in the big picture.

defitvl-180122

The protocol list is also mostly unchanged, but there is one new player we haven’t seen before. Multichain, previously known as Anysawp, has entered the top 10. It is a cross-chain protocol enabling trades between different blockchains. Up to half of Multichain’s TVL is at Fantom.

defi-protocols-180122

Multichain’s move has dropped one of the oldest and best-known DeFi protocols out of the top 10. We are talking about Compound. This is the project that started the first-ever DeFi boom in 2020. Since that, Compound has been overshadowed by more popular loan protocols.

DeFi market is still dominated by Curve & Convex Finance. Lately, we have also seen some of the DeFi tokens make moves in the market. We were expecting this sector rotation also in our earlier market reviews. Aave and Uniswap are examples of DeFi tokens that have outperformed Bitcoin and most altcoins.

Next, let’s look at the blockchain rankings.

defi-chains-180122

Fantom has been the DeFi rocket of the week. The previously mentioned Multichain has given Fantom’s TVL a big boost, but it’s not just that. Many Fantom Dapps have increased their popularity. The native token of the platform, FTM, also moved up by more than 29% last week.

There are no other major changes. The 2nd place is still firmly held by Terra.

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