Bitcoin’s price has fallen for five consecutive weeks. This is something we haven’t seen in seven years. The stock market has also performed historically badly. There are not many winners in the crypto market, and the DeFi sector has lost six percent of its TVL too. It has been a bad week and a bad month for investors.
Bitcoin’s price is at a key support level
Bitcoin’s price is $38.500 at the time of writing this article. The price has been hovering between $40.200 and $41.500 in the previous three weeks. This means that the past seven days have not been great. Instead of a bad week, we’ve had a bad month. April was painful for both stock and crypto investors.
The graph below shows Bitcoin’s price performance in the past six months. The blue line is the 50-day moving average and the purple line is the 200-day moving average.
The biggest change from previous weeks is the disappearance of the major trend channel we have been following. Bitcoin broke the bottom of the channel a week ago but climbed back inside for a brief period. The channel was destroyed last week when the price fell firmly below the $40K level. Investors are now looking for new technical patterns.
The blue support zone has brought lots of buyers to the market in the previous months. It’s around $36.000-$37.500. Bitcoin has found support in this area when the price has fallen significantly since January. It seems like the $37.500 price level held again.
The reasons behind Bitcoin’s price drop haven’t changed. It’s the same old stock market. Bitcoin’s correlation to Nasdaq remains strong. In fact, crypto market bull runs have mirrored the Nasdaq since 2017 already.
— Sven Henrich (@NorthmanTrader) April 29, 2022
April was the worst month for Nasdaq since 2008. This was when markets were in the middle of the financial crisis of 2008-2009. The history of Nasdaq goes to 1971. The first four months of a year have never been as bad as they have been in 2022!
The S&P 500 mirrors the biggest companies in the United States. This index has begun the year worse only two times in its history: in 1931 and 1939. This is when the entire world suffered from the great depression. The downtrend we have seen in 2022 has been historically bad.
We have also seen historical events in Bitcoin’s price graph. It has printed five consecutive red weekly candles in a row.
Four consecutive red weekly candles is already a rare event, something you tend to see once in 12 to 24 months. There have been only a couple of times in Bitcoin’s history where we have seen five (or more) red weekly candles in a row. The last time this happened was in 2014.
At the same time, the dollar index (DXY) is about to break levels not seen in twenty years. The strength of the U.S. dollar is often inversely correlated with asset prices. It’s no surprise Bitcoin has gone down in an environment like this.
In fact, one must admit that Bitcoin is holding surprisingly strong! The macro trends couldn’t be more negative at the moment.
We might see some volatility this week due to the upcoming Fed meeting. Jerome Powell is going to announce Fed’s plans for hiking rates and fighting inflation. His words have rarely had more significance to the stock market than this week.
Investors need a signal from the Fed that it’s not going to sacrifice the stock market in its war against inflation. If Powell announces unexpected rate hikes or comes out over aggressive, the stock market could have an ugly reaction. This would drive the price of Bitcoin down as well.
Altcoins had a tough week
The past week was really bad for altcoins. Bitcoin’s dominance went up almost 0,6 percentage points, which means that there haven’t been many winners in the overall market. It’s almost shocking how poorly the blue-chip coins have performed.
The list below shows the top 15 cryptocurrencies by market cap with their performance against Bitcoin (24 h, 7 d, 30 d).
When excluding stablecoins, there is just one coin on green against Bitcoin: the BNB token. Even BNB is just marginally up. When we look at the 30-day column we can see just BNB and Dogecoin holding against Bitcoin. The past month has been brutal for blue chip coins.
There has been an expected change at the 10th position. Terra’s UST stablecoin has moved above Dogecoin and Avalanche and claimed a top 10 place for the first time. Binance USD has followed UST and moved also above DOGE and AVAX.
There are just two altcoins in the top 100 list more than 10% gains against Bitcoin: Tron and XDC Network. Both are almost 20% up vs. Bitcoin.
XDC Network is a project few have heard about before. Its native token XDC seems to be boosted by the new legislation in Panama.
The 2nd & 3rd debates regarding the bill promoting the use of $XDC & other select digital assets — including but not limited to $BTC, $XRP, $ETH & $ALGO — as mediums of payment in the nation of #Panama have both passed, unanimously, in favor of enactment – 68 votes to 0
— XDC Foundation (@XDCFoundation) April 28, 2022
The project was previously known as XinFin. It’s one of the many smart contract platforms. The XDC token is one of the cryptocurrencies that will be supported by Panama’s new crypto law. It could help to increase XDC’s adoption.
Tron is also a smart contract platform. The peak of its success was in 2018 when the altcoin market was rallying. Since that we’ve seen Tron lose ground to other platforms. The native token TRX is hot this week due to the launch of the USDD stablecoin.
USDD is an algorithmic stablecoin, which means it’s competing against Terra’s UST and Near Protocol’s USN. Every USDD token is created with TRX, which is why investors are speculating about its price. UST has given a major boost to Terra’s Luna token in the past year.
Curve’s number one position under threat
The DeFi sector is down with the rest of the market. The liquidity describing the entire DeFi market (TVL) was $213.36 billion a week ago. Today the TVL is at $199.28 billion. This translates to a drop of 6.6 percent.
There is an interesting battle raging at the protocol level. Lido and Anchor have dominated the protocol rankings in 2022. They are once again the best-performing dapps. Anchor is the only one of the top 10 dapps that’s almost showing positive development.
The number one spot is still held by Curve, though, by a thread. The gap between Curve and Lido is just $0.15 billion. We could see a new leader in the DeFi market any day.
There has been just one change in the protocol rankings. PancakeSwap and Instadapp have switched positions at 9th and 10th place. The margin is also very small in this case.
When we look at the blockchain list we can see one change. The previously mentioned Tron has overtaken Fantom and claimed the 6th place.
Tron is the only smart contract platform in the top 10 list that has gained liquidity. It’s very likely due to the previously mentioned USDD stablecoin.
The past week has been a quiet one in the DeFi market. There isn’t a single blockchain in the top 30 rankings with 10% or higher TVL growth.