News
09
Aug
crypto market review

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Market overview 8/9: Bull market under threat

Bitcoin’s price is up three percent since last week. Altcoins have also performed well. The whole crypto market has been in an uptrend for two months, but now this bull run is under a threat. Investors are afraid of the upcoming CPI data from the United States.

Bitcoin’s promising uptrend is in danger

Bitcoin’s price is $23,600 at the time of writing this article. The price was 700 dollars lower a week ago, which translates to a three-percent move. Bitcoin has been in an uptrend since June bottom. The graph below shows Bitcoin’s price development on daily candles. It also includes two trend channels.

btc-0908

It seems that Bitcoin’s price is forming a so-called bearish flag. We saw the exact same pattern in early 2022 as well. This pattern is formed when a price is trending higher inside a channel making higher highs and higher lows.

Even if this looks like a nice uptrend, the price will break this pattern downwards more than eight times out of ten.  This is exactly what happened in early May. Bitcoin’s price crashed 50% after exiting the channel.

There is a new threat coming this week, which might just push the price out of the channel. We’ll receive tomorrow (8/10) the new CPI print from the United States. The consensus is around 8.7%, which is still very high. But why is an unexpectedly high CPI print so dangerous right now?

Markets have been rallying for weeks under the assumption that Fed starts to ease with rate hikes. This is because of what Fed chairman Jerome Powell said after the previous FOMC meeting combined with the weakening economic data from the United States. However, there are dark clouds in the sky.

Surprisingly good data came out of the US job market last week. This is exactly the part of the economy the Fed follows closely. It has two mandates: full employment and price stability. If the job market is stronger than expected, the stock market has recovered and inflation remains high…the outcome won’t be pretty. It would force Fed to hike rates faster and longer than anyone expects.

This is why a high CPI print might crash the markets on Wednesday. Investors would wake up to the reality that Fed rate hikes will continue much longer than anticipated. Since the crypto market moves in tandem with the stock market, the CPI print will have an impact on Bitcoin’s price as well.

The recent rally is dividing investors’ views strongly. Many investors are now claiming the June lows to be the bear market bottom. We are still not buying this statement. AboutBitcoin.io believes that there will be another leg down in Q3. This might begin on Wednesday.

Let’s hope for a positive CPI print! This would be great for all investors. Fed is not going to ease the monetary policy until inflation is significantly lower than the current level. Only then can the new bull market start.

Altcoins had a positive week

Altcoin-markkinassa näkyy paljon vihreää väriä. Bitcoinin dominanssi on laskenut viikon takaisesta noin yhden prosenttiyksikön ja lähestyy pian jo 40 prosentin rajaa. Bitcoinin markkinaosuus

There is a lot of green color in the altcoin market again. Bitcoin’s dominance has moved down about one percentage point since last week. It is soon closing the critical 40% level. Bitcoin’s dominance was almost 50% in mid-June.

The current uptrend has been ongoing for two months. Altcoins have been clearly in charge. Smart contract platforms have especially shown strength this summer. This has also been the case in the past seven days.

The list below shows the top 15 cryptocurrencies and how they have performed against Bitcoin.

alts-0908

XRP is the only cryptocurrency on the minus (vs. Bitcoin) with stablecoin excluded. BNB, Polkadot, and Avalanche have been the best performers out of these blue chip coins. They are probably getting a boost from Ethereum, which is trending higher because of the upcoming The Merge upgrade.

Many investors are hedging their Ethereum bets by investing in rivaling smart contract platforms. Should The Merge fail, these would probably see a major short-term price boost.

The biggest movers are outside the top 15 rankings. The rocket of the week has been Flow, which is up more than 52% vs. Bitcoin. Flow is a smart contract platform with a focus on the NFT sector. The Flow token is moving higher because of the recent news related to Instagram.

Instagram is soon integrating NFTs. Flow is one of the first blockchains Instagram supports.

The second-best performer is the Celsius token. This is quite surprising because Celsius is currently fighting for its survival in a bankruptcy trial. How come its CEL token is mooning this week? It looks like investors have organized a short squeeze here.

The term short squeeze became popular in early 2021 when the so-called meme stock started to make massive price moves. Thousands of small investors began buying stocks that big institutions had been shorting too much. This forced the short sellers to cover their short positions, which means buying the stock from the market. And this moves the price even higher.

Looks like some investors are trying to push the CEL token higher with a similar tactic. You can follow the discussion on Twitter via hashtag  #CELshortsqueeze.

The third best performer is Oasis Network and its native token ROSE. We mentioned this coin already last week when ROSE had risen 58% vs. Bitcoin. Now it’s further 31% up. It seems that ROSE is still getting a push from the major news announcement regarding Meta we wrote about a week ago.

Defillama has changed the TVL calculation

There are big changes in the TVL of the DeFi sector this week. For those who don’t know, TVL stands for Total Value Locked. It means the liquidity in DeFi apps calculated in US dollars. We are following the market via popular defillama.com website. This service changed the way TVL is counted after the so-called Saber revelations on Solana.

The TVL of the entire DeFi market is 68.71 billion dollars today. It’s 20 billion lower than a week ago because of the new calculation method.

defi-0908

In reality, TVL is up about four billion dollars since last week. This move is aligned with the performance of the altcoin market again.

The new TVL calculation hasn’t had an impact on the protocol level. The top 10 ranking list is unchanged form last week. Lido, Convex and InstaDapp have lost some TVL but kept their standings nevertheless.

defichains-0908

The second-placed Lido looks very strong. It has seen an almost 70% rise in TVL in just one month. Lido offers liquid Ethereum staking in a way that investors receive synthetic stETH tokens for their staked ETH. These coins can be then traded or staked in other DeFi apps.

Lid’s popularity has grown recently because of the upcoming The Merge update.

Finally, let’s look at the blockchain standings.

defi-chains-0908

The new TVL calculation method has eaten more than 16 billion dollars from Ethereum’s TVL. Yet, Ethereum has about 58% dominance of the entire DeFi market.

We have seen some changes in the list. Ethereum’s Layer 2 solution Optimism has jumped from 10th to 8th place. Optimism has doubled its TVL in one week. This is the first time Optimism is above its rivaling Layer 2 solution Arbitrum.

The native token of Optimism is OP. This coin has also moved 16% vs. Bitcoin last week. OP is up over 200% in dollar terms in just two months. It is likely that OP is also being boosted by Ethereum’s upcoming update.

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