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24
May
crypto market review

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Market overview 5/24: Bitcoin in an eight-week losing run

The historical downfall of Bitcoin continues. Are investors finally going to get some relief? Tron and BNB have performed the best out of large-cap altcoins. Terra’s collapse has changed the landscape in the DeFi sector.

Bitcoin’s price just keeps on falling

Bitcoin’s price is $29,300 at the time of writing this article. The price was about $30,000 a week ago, which translates to a loss of about two percent. In the big picture, however, the situation is far more dramatic. Bitcoin’s price has now fallen for eight consecutive weeks. We have never witnessed such a price move in Bitcoin’s history.

The graphic below shows Bitcoin’s price movements on weekly candles. As you can see, we are building the ninth red candle in a row.

btc-2405

The graph has also the 200-week moving average included (the blue trend line). This is significant because Bitcoin’s price has fallen to this level during the 2018 and 2020 crashes.

Many investors are trying to figure out where the bottom is right now. The 200-week moving average is a good guess. The trend line is currently at the $22,500 level and going up a few hundred dollars per week.

We can expect some positive movements in the short term. Markets have gone down so long now that it’s unlikely we still see several negative weeks. Valuations have fallen so much that more and more investors are willing to throw in money again.

Bitcoin’s price has been hovering between $28,000 and $30,000 in the past weeks. This is a zone where the price has found support many times before.

In the big picture, nothing has really changed. Bitcoin’s price is going down because the stock market is going down. The correlation between stocks and cryptos remains high.

The stock market is still facing the same headwinds we’ve written about in the previous six months. Unfortunately, there haven’t been positive developments in the macroeconomy. Central banks are fighting inflation regardless of the stock market development.

The war in Ukraine shows no signs of stopping either. More and more analysts are talking about a food crisis that the war might cause. Coin Bureau published a great video on the subject recently. Challenging weather conditions have hurt farmers elsewhere, and the price of fertilizers has exploded. This means higher food prices and higher inflation globally.

Both Europe and the U.S. are also facing a recession. Fed and the ECB are between a rock and a hard place because high inflation prevents them from stimulating the markets.

ECB’s reference rate is still negative even if inflation has reached record highs in Europe. The reason is that higher rates would cause too many problems for weaker euro countries, like Italy and Spain. Though, it looks like even ECB is finally ready to tighten its monetary policy.

We have written about these challenges since late 2021. It’s difficult to see a long bull market before central banks pivot. We recommend investors stay calm, conservative, and cautious. Remember: even if some altcoin has crashed 90% it doesn’t mean it can’t go down another 90%.

Tron is back in the top 15 ranking list

Bitcoin’s market share hasn’t changed much since last week. This means that there are both winners and losers in the altcoin market. In the big picture, Bitcoin’s dominance is at the highest level since October 2021. The reason for this is Terra’s collapse.

The list below shows the top 15 cryptocurrencies in the market and their performance against Bitcoin.

alts-2405

When we exclude stablecoins, there are just two cryptos showing green color against Bitcoin: BNB and Tron.

BNB (previously Binance Coin) has been doing well for some time. It’s been boosted by Binance’s expansion to the Middle East and the recent license approval in France. There is also speculation over Terra apps moving to BNB Chain. Both Terra and BNB Chain are built with Cosmos SDK.

Tron is also a smart contract platform, like BNB. It was very popular during the altcoin boom of 2017. In recent years, Tron hasn’t received much attention in the platform sector. The native token TRX has received a boost from the launch of USDD stablecoin.

USDD is an algorithmic stablecoin, just like the infamous UST. Terra was using Anchor protocol to offer 20% APY for UST deposits, but Tron has done one better. You can get even 30% APY for USDD deposits also through many exchanges, like KuCoin, for example.

Tron founder Justin Sun believes that USDD will be successful. The biggest reason is that Tron has built much larger reserves to support the stablecoin.

Tron’s native token TRX was the third best performer in the top 100 ranking list (+21% vs Bitcoin). Only IoTeX (+29%) and Fantom (+22%) did better.

Fantom’s FTM token is up due to rumors surrounding the head developer Andre Cronje. He made an exit a couple of months ago and left the entire crypto industry. Now there are rumors that Cronje is back. He had a big role in Fantom, and Cronje was also involved in several DeFi apps.

Fantom has also launched its own stablecoin called fUSD. This is not an algorithmic stablecoin like the previously mentioned USDD.

IoTeX is a project unknown to most investors. It is operating in the IoT (Internet Of Things) space, like IOTA. IOTX is the native token of IoTeX. The price is up because of a recent MainNet upgrade. This looks like a short-term bounce.

Maker is the number one DeFi app again

The liquidity of the DeFi market hasn’t changed much since last week. The number is now 111.3 billion dollars. Check defillama.com for up-to-date figures. The screenshots in this article are from Defillama.

defi2405

We published the previous market overview on the 3rd of May 2022. This was the time before Terra’s collapse. The TVL of the DeFi sector was almost twice as high. Terra’s crash spooked investors really bad which caused other popular apps to lose liquidity as well.

This means that the top 10 list of DeFi apps has changed significantly. Terra’s popular Anchor protocol crashed from third place to zero due to the collapse of the entire Terra ecosystem. Lido has also suffered heavily.

defiprotocols-2405

The good old Maker has claimed the pole position again. Curve, which has dominated the DeFi market for a long time, is now in second place. Curve took a big hit from UST leaving its pools. Aave has also climbed to third place after hovering around 5th-6th for a long time.

The only significant performer is JustLend. That is a liquidity app running on Tron. All major Tron DeFi apps are named Just- due to the founder, Justin Sun. JustLend has become more popular lately due to the previously mentioned USDD stablecoin.

Terra’s collapse has changed the blockchain rankings as well. The top three look different now. Terra used to be the second largest DeFi platform with a wide margin.

defichains-2405

Ethereum is still holding the number one position. Its market share has gone up from 55% to over 63%. BNB chain has moved to second place.

The previously mentioned Tron is skyrocketing. The general DeFi panic has caused all Tron’s competitors to lose liquidity in recent weeks while Tron has gained it. This has boosted the Tron platform to third place.

There are now new platforms in places 4 to 10. The most significant change is the big drop in TVL numbers. Just three weeks ago it took almost 2 billion dollars of liquidity to be in the top ten. Waves is now in 10th position with less than one billion dollars of TVL.

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