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20
Sep
crypto news

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Market overview 9/20: Strong dollar is pushing crypto prices down

Bitcoin’s price is down more than ten percent since the previous market overview. Both crypto and the stock markets are falling because of the strong US dollar. XRP has performed best out of the top 15 altcoins. There are no more than a couple of well-performing altcoins even in the top 100 list.

Bitcoin’s historical support level holds

Bitcoin’s price is 19,000 dollars at the time of writing this article. This is more than 3,000 dollars lower than seven days ago. Bitcoin’s price fell more than 11 percent in the previous week and the downtrend has continued by 1,8 percent early this week.

The graph below shows Bitcoin’s price development on weekly candles in the previous two years.

btc-2009

There is a clear support level visible between 18,500-19,500 dollars. Bitcoin has tested the strength of this support zone several times in 2022 as well. A weekly candle has never closed below 18,500 this year despite the fact that the price of Bitcoin has briefly fallen below 18,000 dollars.

The blue trend line is the 200-week moving average. It has provided historical support for Bitcoin. As we can see, the price fell below this trend in the early June crash and hasn’t really claimed it successfully after.

Bitcoin’s price was over 22,000 dollars at the beginning of last week. Tuesday was a really bad day though, and Bitcoin crashed more than ten percent. The price went pretty much sideways for the remaining of the week.

The reason for last week’s price fall wasn’t Ethereum’s The Merge update. Instead, it happened because of the US dollar index (ticker: DXY). Last Tuesday was one of the strongest days for the US dollar in 2022. It’s no wonder that crypto and equity markets crashed.

dxy

The US dollar has been incredibly strong in 2022 and made massive gains against all asset classes and all major fiat currencies too. The strength of the dollar combined with the Fed monetary policy keeps equities and the crypto market in a downtrend.

Investors are also anxious because of the upcoming (9/20 to 9/21) FOMC meeting. Fed board members gather again to discuss Fed policies. Some investors fear that Jerome Powell could announce a full percentage point rate hike instead of the 0.75% which is widely expected.

Jerome Powell’s speech is going to have a big impact on the markets, again. His carefully drafted speech will either spook the investors or give them some hope of a Fed pivot. At the moment Powell seems to have just one goal: to kill the inflation monster. This means more rate hikes and tighter monetary policy until we see the CPI number drop significantly lower.

Smaller altcoins have outperformed Bitcoin

We have seen lots of volatility in the markets in the past seven days. Sometimes Bitcoin has outperformed altcoins and sometimes it has fallen instead. Bitcoin dominance is currently at around 41%. This is roughly the same level it was seven days ago.

Most small altcoins have done very well against BTC, but the biggest one, Ethereum, has fallen significantly. The list below shows the 15 biggest altcoins and their performance against Bitcoin.

alts-2009

Ethereum has taken a hit because of The Merge update that took place last Thursday. Even if The Merge was a huge success, the price crashed on the following day compared to Bitcoin. This is known as a sell-the-news event. It happens quite often in crypto after a major event takes place.

If we exclude stablecoins, the best performer of the top 15 coins is Ripple’s XRP token. It’s up 26.5% vs. Bitcoin in the past seven days. XRP has gone up because of some (possibly) positive news that has come out of the Ripple vs. SEC court drama. Read more about the subject from the latest news overview.

There are only five coins in the top 100 list, which are up in dollar terms. XRP is the second-best performer of these. The number one spot goes to Chiliz and its CHZ token. This coin is up 22.5% in dollar terms and 39% vs. Bitcoin.

The CHZ token is probably mooning because many Chiliz fan tokens have been listed on new exchanges and launchpads.

Algorand’s ALGO token is the third-best performer in the previous seven days. ALGO, CHZ, and XRP are the only coins that have gone up more than 10% in dollar terms. Algorand has been boosted by the news of its protocol update. Algorand can handle now up to 6000 transactions per second! Read more about the update from Algorand’s blog.

The previous seven days have been tough for cryptos. The market has fallen once again hand-in-hand with the Nasdaq technology index.

The DeFi sector is in a small downtrend

The liquidity of the DeFi Sector (TVL, Total Value Locked) has mirrored the movements of the larger crypto market all year. This trend is very much visible again. TVL is down from last week’s 59.39 billion dollars to 54.46 billion dollars. This translates to a loss of eight percent. Images below are captured from defillama.com, which is the best DeFi stats site in the market.

defi-2009

As we have mentioned many times before, there haven’t been any major events in the DeFi market since the early summer crashes. TVL has been going sideways for more or less for the previous three months. There haven’t been significant changes at the protocol level either.

There are two small changes since the previous market overview. Curve has climbed to third place past Aave. Curve is a decentralized exchange that offers low-slippage trading for stablecoins. It is one of the few protocols with a positive TVL change. The difference between Curve and Aave TVL is marginal.

defi-prot-2009

Instadapp and Compound have switched places multiple times this year. It has happened again. In fact, Instadapp’s TVL has fallen more than the TVL of any other DeFi app in the top 80 rankings. This crash has helped Compound to claim the 9th place.

The blockchain top 10 rankings are unchanged from last week.

defi-chains-2009

We haven’t seen anything interesting in the blockchain rankings in months. Terra’s collapse in May was the last major change in the platform rankings.

The biggest change to 2021 is the rise of Ethereum Layer 2 solutions (Arbitrum, Optimism) to the top 10 rankings. Both platforms have lots of active protocols by now. When we include Polygon (sidechain), it means three out of the top ten smart contract platforms are Ethereum scaling solutions.

 

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