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Market review 10/5: Green candles

The fourth quarter has traditionally been profitable for cryptocurrencies. It looks good this time too, as Bitcoin broke the $50,000 threshold in the first days of October. Bitcoin’s dominance has remained almost unchanged compared to last week. The biggest altcoins are down compared to Bitcoin. The DeFi sector has set a new record.

Bitcoin’s price crosses the $50,000 mark

The price of Bitcoin is about $50,000 at the time of writing this article. The past week has been very profitable for crypto investors. Bitcoin has gained as much as $6,000 since our previous market review.

Below is the price graph of Bitcoin. One candle represents one day. The dark blue line is the 200-day moving average and the turquoise line represents the 50-day moving average.

btc20211005

The price of Bitcoin climbed from $41,500 to more than $48,500 in just two days. At the same time, we returned above the 50 and 200 days moving averages. This is a very bullish signal.

This move was probably triggered by a statement from the Federal Reserve. Fed President Jerome Powell commented Thursday that the United States has no intention of banning cryptocurrencies as China did.

Bitcoin’s rapid price rise also caused liquidations of short positions, which accelerated the move further.

Shorting means betting that the price of Bitcoin goes down. Leverage is also often used when shorting. The larger the leverage is, the less is needed to liquidate the position. When the position gets liquidated, a market buys is made to cover the losses.

The last quarter of a year has been traditionally positive for cryptocurrencies. This was also proven last year. Bitcoin’s move towards the new All-Time High started around this time in 2020.

The graphic below shows how Bitcoin has performed in the fourth quarters.

At the moment, we are in the final stages of the current halving cycle. In three months, it will be four years since the peak of the previous cycle.

PlanB, the developer of the popular S2F model, believes that this bull market has about six months to go.

So far all signs support the theory of a positive Q4. It is particularly supported by the on-chain data. Large investors (whales) have bought tens of thousands of bitcoins since the summer. It looks like the supply shock will be coming soon.

Bitcoin’s dominance remains unchanged

Bitcoin’s dominance is at an established level. At the time of writing, the dominance is 42.86 percent. Last week, the corresponding number was 41.81 percent. There has been no significant change.

Below you will find a graphic showing TradingView’s CRYPTOCAP index.

btcdominance20211005

This year we have seen three different trends. At the beginning of the year, Bitcoin’s dominance peaked at 73.63 percent. The dominance then plummeted to 39.66 percent in mid-May.

In July, the dominance was growing again, with Bitcoin increasing its market share to almost 50 percent.

For the past few weeks, Bitcoin has been running at 40 percent on both sides.

Largest altcoins in red

All the biggest altcoins are in the negative territory compared to Bitcoin. You can see the situation below. The picture shows the top 15 altcoins and their performance (vs BTC).

altcoins20211005

Of the largest altcoins, only Binance Coin, Solana, and Terra are green in the past seven days. Solana and Terra have done great all autumn. Binance Coin has not performed so well, but now it’s showing some signs of reviving.

If we go further down in rankings, we’ll find the AXS token. Axie Infinity has risen by almost 70 percent compared to Bitcoin. Why? There was a $60 million airdrop and a staking possibility with a gigantic 385 percent APY.

Shiba Inu, a meme coin that became popular earlier this year, is also on the rise. It has pumped up more than 60 percent compared to Bitcoin. SHIB owners can probably thank Elon Musk for this.

Elon Musk didn’t directly mention the Shiba Inu coin but he tweeted a photo of his Shiba Inu pet dog. This gave a big boost to the SHIB token. Dogecoin saw also a price increase of 10 percent.

The smart contract platforms OMG Network, Icon, and Qtum have also done well. In general, however, these platforms have fared poorly in the intensifying competition.

DeFi sector continues to break records

We have written about the growth of the DeFi sector for a couple of weeks. This trend shows no signs of fading. The TVL (Total Value Locked) of the DeFi market is $199.53 billion at the time of writing. Last week, the corresponding number was $179.11 billion.

defi20211005

The DeFi market has done better than the rest of the cryptocurrency market for several weeks. In addition to the NFT boom, this is also influenced by Chinese traders moving from traditional exchanges to decentralized exchanges. This is because of the ever-tightening crypto ban in China.

At the protocol level, there’s been a change in the top brawls. Aave has claimed the first place after losing it for a couple of weeks to Curve protocol. Aave’s TVL has grown about $2 billion in a week. Curve has increased its own TVL balance by about $1 billion.

defiprot20211005

Almost all top DeFi protocols have increased their liquidity. The only exception is the Compound. Its development was hampered by an embarrassing bug. Check the video below for more information.

In short, Compound’s bug caused the protocol to hand out too many rewards to investors who had provided liquidity. This bug cost the protocol about $100 million.

At the blockchain level, the situation is as follows:

defichains20211005

All smart contract platforms have increased their TVL numbers since last week. Waves, which crypto enthusiasts might remember from 2017 and 2018, has made its way to the top 8.

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