Bitcoin’s price is hovering at the key support zone of 20.000 dollars. It looks like we might see a sub-20k price soon. Altcoins have had a strong week – Polygon and Compound are performing well. The downfall of the DeFi sector continues.
Bitcoin is in a downtrend
Bitcoin’s price is 20.100 dollars at the time of writing this article. The price was almost exactly the same a week ago. Though, we have seen some volatility during the past seven days. Bitcoin’s price moved all the way to 22.000 dollars before it started to slide down during the weekend.
The graph below shows Bitcoin’s price development with daily candles. The blue line is the 50-day moving average and the purple line is the 200-day moving average.
There haven’t been positive developments in the big picture. On the contrary. Bitcoin suffered a heavy crash (over 30%) about two weeks ago when the problems of the lending service Celsius surfaced. This topic was covered in detail in the news report.
The issues at Celsius and 3AC (a hedge fund that recently collapsed) caused liquidations and drove the price even further on the 18th of June. This is when Bitcoin’s price crashed all the way to 17,000 dollars. History was also made because Bitcoin has never fallen below the top of the previous bull market.
The peak of the 2017 bull market was 19.500-20.000 dollars depending on the exchange.
It’s likely that Bitcoin’s price would be closer to 30,000 dollars without Celsius and 3AC. The problems of 3AC have caused contagion to other crypto companies. Sharp price crashes have also liquidated many individual investors.
Today we had news that 3AC has been ordered to liquidation.
BREAKING: BVI court orders liquidation of Three Arrows Capital: Sky Newshttps://t.co/lN4YTbMSLH
— The Block (@TheBlock__) June 29, 2022
Even if Celsius and 3AC were healthy, Bitcoin would still be in a downtrend. All the headwinds coming from the macro economy are still there.
Central banks keep tightening their monetary policies. Fed hiked its benchmark rate by 0.75 percentage points earlier in June. This is the highest raise we have seen since the 1990s. Fed has its hands tied because of the raging inflation. It is forced to fight it by raising rates even at the expense of the stock market.
Nothing suggests that inflation would go down significantly anytime soon. This means we’ll see more rate hikes and downward pressure on the stock market. The war in Ukraine is also very much on and shows no signs of stopping. There is growing evidence that both the U.S. and Europe are in a recession.
We have covered these same topics almost every week in 2022. It’s unfortunate from the investors’ point of view that there is no relief in sight. Bitcoin’s price is also heavily correlated with the stock market. This is why the state of the macroeconomy shows in the crypto prices too.
It’s unlikely we’ll see any major changes in the next few weeks. Investors are now waiting for the next CPI print that’ll come out in early July. We’ll also get the official GDP number for the second quarter in late July. This will confirm if the U.S. economy is officially in recession.
Crypto investors should continue to exercise caution. Bitcoin’s price could very well go to test the bottom at 17,500 in the coming weeks. There are no positive signals in Bitcoin’s price development at the moment.
Altcoins had a strong week
The altcoin market has become an eyesore in 2022. Bitcoin’s downfall has made all other currencies crash even more. The past week has been an exception to this rule, though. Almost all altcoins have outperformed Bitcoin.
The list below has the top 15 cryptocurrencies and the price development compared to Bitcoin (24h, 7d, 30d).
Polkadot is the only top 15 coin that has underperformed Bitcoin. The differences are mostly marginal, though. Dogecoin is the only large-cap currency that has outperformed Bitcoin by more than five percent.
When we look at the top 100 list, we can find more strong performers. Polygon’s MATIC token has beaten Bitcoin by 32% last week. It seems that Polygon has been boosted by the first integration1 of the Polygon ID technology.
Polygon ID is live 🔥
Today, we’re announcing the launch of the first Polygon ID integration: @0xPolygonID x @0xPolygonDAO!
Polygon ID is a self-sovereign identity solution powered by ZK cryptography that brings huge potential for DAO governance.
Read on! 🧵
— Polygon – MATIC 💚 (@0xPolygon) June 22, 2022
Polygon ID has lots of potential in the world of DAOs. It enables secure and encrypted ID technology to blockchains. Similar solutions are being built on other networks too.
The Polygon ID doesn’t have a direct impact on the price of MATIC. It looks like investors are speculating that it’d impact the whole ecosystem positively in the near future.
The second-best performer has been the DeFi app Compound. Its governance token COMP has outperformed Bitcoin by 25%. Compound might be getting a boost from the upcoming euro stablecoin. According to Circle’s website, Compound will be one of the few DeFi apps supporting the Euro Coin.
There are no major performers in the market besides these two. Most of the altcoins have done better than Bitcoin, though. This hasn’t happened often in 2022.
The DeFi sector keeps losing liquidity
The year 2022 has been brutal for the DeFi sector. The crash of Terra Luna removed almost 50% of the liquidity in early May. The recent problems of Celsius have caused a further 25% downfall in TVL.
There is as much liquidity in the DeFi market as in April of 2021. Today’s TVL number is just 73.7 billion dollars.
Liquidations have played a big part here. Many loans have been automatically liquidated and investors have lost their collateral due to the sharp crash in prices.
In late 2021 there were DeFi protocols with over 20 billion dollars of liquidity. Now we are far from these levels. The leading DeFi app, Maker, has a TVL of 7.6 billion. Maker has dominated the market after Terra’s collapse.
We’d also note that Defillama has bundled now all Aave versions together. This has moved Aave to the right place in the rankings.
We can see small changes in the lower rankings but nothing dramatic since the previous market overview. The previously mentioned Compound hasn’t received a liquidity boost despite the good performance of its COMP token.
One should note dYdX, which is currently holding the 17th ranking with $680 million TVL. It made the headlines last week by announcing that dYdX will launch its own blockchain in the Cosmos ecosystem. The app is currently running on Ethereum.
The founder Antonio Juliano was a guest at the popular Bankless Youtube channel last weekend. Check this video out if you want to know more about dYdX plans.
Finally, let’s look at the blockchain rankings.
There are no changes in the top positions since the previous market overview. Cronos & Fantom and Waves & Arbitrum have changed places, but TVL differences remain small.
Tron is still holding strong in 3rd place. Investors have trust in the platform even if the USDD stablecoin lost its dollar peg recently. USDD price crashed to $0.93-$0.97 for around a week until it reached parity again. USDD has given a major boost to the Tron platform in the previous two months.