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20
Apr
crypto-market-review-12

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Market overview 4/20: Buyers came to the rescue at the last minute

Bitcoin’s price fall was halted at the last minute. Even if the downtrend was reversed, the outlook of the market is still uncertain. Bitcoin remains highly correlated with the stock market. Stepn and Apecoin were the top altcoin performers. Terra’s DeFi apps are running hot again. Beanstalk was hacked for over $180 million.

Bitcoin’s price fell out of the trend channel

Bitcoin’s price is $41,500 at the time of writing this article. The price was $40,200 a week ago, which means we’ve seen positive development in the market. Though, things looked very different just a few days ago. Bitcoin’s price had fallen out of the trend channel and investors were biting their nails anxiously.

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

btc-2004

Most analysts have their sights set on the trend channel you can see in the graphic. It has guided Bitcoin’s price development in 2022. On Monday, it looked like the price was falling out of the channel. This would have been a terrible signal for another reason as well.

The candles have so far closed on a positive trend by forming higher lows. Each drop has found the bottom a little bit higher than the previous one. If a daily candle had closed below $38,000 this trend would have been broken.

Luckily the bulls were back in town at the last minute. Bitcoin’s price recovered from $38,500 to $41,000 on Monday evening.

This price move was once again triggered by the stock market. All major U.S. indices turned positive after a slow start exactly at the same time. Bitcoin’s correlation with the stock market has been one of the hottest topics in 2022. The correlation with Nasdaq is at a very high level right now.

One can see a trend change taking place in November 2021. Gold and the DXY (U.S. dollar index) have taken an opposite direction compared to Bitcoin and Nasdaq. There is a reason for this. November was the time when the Fed announced its plans for rate hikes.

There is lots of evidence of stocks performing well in an environment with rising interest rates. This is because rates are usually hiked to calm down an overheated market. But this time it’s different. Fed is hiking rates because they need to stop inflation. There is strong political pressure behind the decision. If the inflation threat wouldn’t exist, central banks would never tighten.

There are more and more hawkish comments coming out of the Fed officials. In other words, Fed is serious about fighting inflation. It looks like the stock market (and crypto markets) could be sacrificed in this fight. Many analysts believe that eventually, Fed needs to reverse action if the markets go down too much.

We don’t expect any major changes to the current market environment in the short term. We are soon approaching the summer period as well, which is traditionally slower. “Sell in May and go away” is a phrase often quoted in the investing world. We don’t expect the correlation between Bitcoin and the stock market to break in the near term either.

We’ll most likely see sideways action combined with volatility until there is some good news. An end to the war in Ukraine, peak inflation, Apple buying Bitcoin, or something of this magnitude.

Stepn keeps outperforming other altcoins

Let’s take a look at the altcoin market. Bitcoin’s market share has remained unchanged, which means one shouldn’t expect any major movements in the blue-chip part of the market. This refers to the top 15 rankings.

altcoins-2004

There is just one coin in the top 15 rankings with better than 5% performance against Bitcoin: Terra Luna. We have mentioned this cryptocurrency almost weekly. It is again boosted by the constant growth of Terra’s UST stablecoin.

Luna took over Cardano as well and moved to 8th place. XRP, Solana, Terra, and Cardano are between 32 and 36 billion dollars in market cap. Hence, the positions from 6th to 9th change constantly.

The previously mentioned UST stablecoin reached a new milestone. It moved above Binance USD (BUSD) in market cap and became the third-largest stablecoin. The market cap of UST has grown over 70% in this calendar year. At the same time, USDC has grown 15% and USDT just 5%.

The biggest mover of the top 100 list is Stepn. The price of its GMT token is up 58% in dollar terms and 52% against Bitcoin. This is a very popular play-2-earn game on the Solana platform. Stepn has also partnered with Binance’s NFT marketplace.

Stepn launched another token last week called GST (Green Satoshi Token). This has also boosted the growth of GMT. The difference is this: GMT is the governance token of Stepn, while GST is the token users can earn by playing.

The second place goes to Apecoin. This coin hit the market just over a month ago. You can check more information from our beginner’s guide. Apecoin is up 33% in dollar terms.

It seems like the APE token is up because of the new metaverse called Otherside. This is developed by Yuga Labs, the company behind Apecoin and also Bored Ape Yacht Club NFTs. There are rumors that virtual land will be sold in the game with APE tokens.

Otherside will be launched on the 30th of April. Apecoin functions as the official currency in this metaverse.

There are also about a dozen other altcoins that have beaten Bitcoin’s price move by more than 5% in the previous seven days.

Slight growth in the DeFi sector

The liquidity in the DeFi sector has mirrored the general market trend again. The TVL (Total Value Locked) is up from last week’s 210 billion dollars to 216 billion dollars.

defi-tvl-2004

Today’s TVL number is about 20% short of the all-time high that was reached in November 2021. It is also about 20% up from the January 2022 lows. Check defillama.com for up-to-date information.

There is also one piece of news we’d mention before going further. A DeFi protocol called Beanstalk suffered a hack last week. The attacker managed to pull 182 million dollars worth of Ether, BEAN stablecoin, and other cryptocurrencies.

This loss was the fourth largest in DeFi history. It hasn’t got much attention, though. This is because Beanstalk wasn’t a popular application. The previously mentioned BEAN is a credit-based stablecoin. You can read more about the project at bean.money.

Let’s move to the protocol rankings next. There haven’t been any changes in the top 10 rankings. Instadapp was the only protocol showing green colors last week, this time it’s the only dapp in the red. In general, TVL changes have been small.

defi-prot-2004

Lido and Anchor have got the most growth. Lido’s TVL is split mainly into Ethereum and Terra platforms. There was decent growth on both ecosystems last week. Anchor is the protocol offering great yield for Terra’s UST stablecoin.

Lido and Anchor moved above Maker a couple of weeks ago. It seems like the gap is widening further. It won’t be long until Lido and Anchor will challenge Curve for the first place.

Finally, it’s time to look at the blockchain rankings.

defi-chains-2004

There is one change in this list. Arbitrum has claimed the 10th place from Waves. We witnessed massive growth in Waves for many weeks, but now it looks like the platform is coming back to earth. Waves has seen a bigger decline in TVL than any other top 30 blockchains.

Arbitrum is Ethereum’s Layer 2 solution. It has more liquidity than all Layer 2 competitors put together. Sushiswap, GMX, and Curve are the most popular dapps running on Arbitrum.

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