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Market Review 11/22: Investors’ nerves are being tested

The price of Bitcoin is falling. Investors are nervous and speculating if the bull market has ended already. There have been no changes in Bitcoin’s dominance. Avalanche and Crypto.com have performed well in the altcoin category. DeFi sector is stable.

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Last week ended in red for Bitcoin

At the time of writing, the price of Bitcoin is about $57,400. This is more than $8,000 lower it was a week ago. No wonder the mood in the market is very nervous.

The graphic below shows the price development of Bitcoin over the past few months. The blue line represents a 50-day moving average and the purple line represents a 200-day moving average. These are frequently used indicators for bull and bear markets.

btc 22-11-21

Last week was not good for Bitcoin. On Tuesday, the price of Bitcoin dropped about $8,000 all the way to $58,000. The bottom was eventually found at $55,000. The price found an upward trend at the end of the week, but there was a new crash on Monday.

Analysts were hoping to see the weekly candle close above the 50-day average and $60,000. However, that level has turned into a resistance level instead. This is a bit worrying.

Yet, there is no reason to panic. We have seen several corrections of this magnitude in 2021. For example, Bitcoin’s price dropped from $53,000 to $40,000 in September. The bull market continued even stronger after this event.

There are no obvious reasons for the unfavorable development of Bitcoin’s price. Such corrections usually occur when the market becomes too greedy and leverage increases. New buyers are needed to turn the trend upwards.

We have not changed our opinion about the ongoing market cycle. We still believe that Bitcoin’s price will follow the Stock-to-Flow to $100,000 and higher.

At the moment, the mood in the market is negative and nervous. Some investors believe that the bull market is on its final legs. However, on-chain data supports the continuation of the bull market. We don’t think a bull market in crypto ends before we have seen a proper blow-off top.

No changes in Bitcoin’s dominance

Bitcoin’s dominance has remained almost unchanged. The dominance is currently 42.74 percent. In the previous two weeks, this figure has been 43.34% and 44%. The graphic below also shows no clear trend.

cryptocap 22-11-21

Bitcoin had a market share of 50% just over a month ago. There was a significant drop at the end of October, after which the dominance has been standing still for several weeks.

Somewhat surprisingly, altcoins have remained strong despite last week’s drastic corrections. Rapid collapses in Bitcoin’s price tend to cause significant damage to altcoins. Now, however, this did not happen. The rest of the market has kept up with Bitcoin nicely.

Cyrpto.com and Avalanche on the rise

If Bitcoin’s market share does not move significantly, the altcoin market is quiet too. This was also the case last week.

Below you’ll see a list of the 15 largest altcoins with price development compared to Bitcoin.

altcoins 22-11-21

The biggest movers are Crypto.com and Avalanche. Avalanche has climbed to the list of the top 10 altcoins for the first time. It has definitely been one of the biggest movers in 2021 with Solana and Terra.

Crypto.com is best-known for its debit cards and mobile app. The company has spent vast amounts of money on marketing lately. This has probably contributed positively to CRO token’s price development. Crypto.com just announced a $700 million deal for the naming rights of the Los Angeles Staples Center.

The Cronos blockchain, launched in early November, will also bring a new use case for the CRO token. This blockchain is a direct competitor to other smart contract platforms. CRO is the native token of Cronos.

CRO and AVAX set consistently new all-time highs last week. There seems to be no end to this positive development.

Elrond, which ranks 23rd, has also moved 69 percent compared to Bitcoin. It is also a smart contract platform. There seems to be an endless demand for such projects at the moment.

No drama in the DeFi sector

DeFi sector has developed nicely throughout the autumn. TVL (Total Value Locked), which describes the size of the sector, kept going up for months. This upward trend has finally come to an end and the TVL has fallen further from last week.

defi 22-11-21

The TVL is currently $258.58 billion. A week ago, the figure was about 17 billion higher. This is not a dramatic drop, but the trend seems to be changing.

At the protocols level, the situation has been stable for months. We have seen almost no significant changes since the peak of the previous boom in May. Curve, Maker, and Aave are leading the group as usual. The drop in the TVL number seems to be evenly distributed among the major protocols.

defi protocols 22-11-21

As we have written before, the growth of the DeFi sector has not driven up the demand for DeFi tokens. Investors are still not interested in Aave, Curve, or Uniswap – at least for now.

The previously mentioned Avalanche is the only blockchain showing green color. As the rest of the market has declined, Avalanche has increased its TVL by 17.83 percent. Avalanche has also overtaken Terra and climbed to fourth place.

defi chains 22-11-21

The most popular Avalanche Dapps can be found here. One of the most famous is Avalanche’s largest DEX called Trader Joe. The liquidity protocol Aave is also running on Avalanche.

At the moment, there is a hot debate going on about Ethereum’s transaction fees. Gas fees are constantly rising with no end in sight. It’s almost impossible to make a trade at Uniswap with less than $100. One thing investors should remember, though. High fees mean there is high demand. Ethereum has never been so popular it is now.

Photo by Austin Distel on Unsplash

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