El Salvador legitimated Bitcoin to be legal tender alongside the U.S dollar, and on the same day, the price of Bitcoin dropped around 20 percent. Bitcoin’s market share also continues at a low level as the platform category raises an increasing share of investors’ money. The DeFi sector has seen Arbitrum’s strong rise, and Solana, this autumn’s trend cryptocurrency, also continues in the familiar track.
El Salvador made Bitcoin legal tender and BTC price plummeted
Since a green-colored August, Bitcoin has taken a bit of a backward turn. On the same day that the Central American state El Salvador made Bitcoin a legal tender alongside the U.S dollar, the price of Bitcoin dropped by as much as 20%. Coincidentally or not, however, there should be no cause for concern.
As we know, changes in the price of Bitcoin can be very fast. Often, when a collapse hits, the first drop of up to a couple of hours is drastic, after which the market corrects itself slightly upwards. After this, we often see a slightly longer downhill of a week or even a couple of weeks.
September has traditionally been quite weak in Bitcoin’s history, so the drop in price didn’t come as a surprise.
In terms of the future, an interesting point can be highlighted from the charts: the moving averages of 200 and 50 days are cutting each other, resulting in a so-called Golden Cross.
Classically, this has been a good sign in terms of price development. The opposite of the Golden Cross is Death Cross, which last in June led to a significant drop in Bitcoin price.
For the future, Bitcoin’s price development looks good, as Bitcoin has good support levels of between $42k and $43,000 and at $40,000.
Another good sign is also the fact that miners and so-called whales have continued to make Bitcoin purchases, and coins are constantly being transferred from trading platforms to longer-term storage.
93% of Bitcoin's supply hasn't moved in at least a month.
This is an all-time high. Just another metric showing how bullish supply dynamics are. pic.twitter.com/Rx6TuVkdYW
— Will Clemente (@WClementeIII) September 12, 2021
We remain bullish for Bitcoin and we believe that price will hit our 100K target before the end of the year 2021.
Bitcoin dominance remains at a low level
Bitcoin still holds true as the largest cryptocurrency on the market, but its dominance does not seem to be growing. According to the CRYPTOCAP index, Bitcoin’s market share is 41.20 percent, which is almost exactly the same as a week earlier.
Bitcoin dominance is getting lower due to well-performing platform tokens. In addition to Ethereum, Solana, and Avalanche, among others, have also raised a large share of investors’ money, as the DeFi boom is expected to expand from Ethereum’s platform to other platforms as well.
In recent days, we have seen blooms where many smart contract platforms have been up more than 10% compared to the rest of the market.
There is no reason why Bitcoin would increase its market share over the next few days or weeks. In the short term, therefore, the best profits are expected from altcoins. However, it is worth remembering that, at the latest in the next bear market, Bitcoin will for sure increase its dominance significantly again.
Solana continues the merciless rise
This autumn’s absolutely hottest trend project has been Solana, which has continued to greatly grow week after week. Solana has claimed its place among the top 10 cryptocurrencies and will next be claiming the place of XRP. Terra has also done well recently, rising to the TOP-15 list.
The image below has the performance of top 15 altcoins compared to BTC (not USD).
Despite Bitcoin’s ever-shrinking market share, not all altcoins on the TOP-100 are performing the same way. A clear trend is that smart contract platforms are currently in the investors’ liking. Almost all of the best-performing altcoins are representatives of this category.
The reason for the new trend is pretty clear. There is a fierce NFT boom going on, spread not only in Ethereum but also to other platforms. However, it’s probably a short-term trend, so you should be careful with the NFT boom.
Cardano’s ADA token deserves its own mention. The price of the token has risen at a frenzied pace in recent weeks. This is mainly because smart contracts were finally brought to the Cardano platform after years of waiting.
Many investors expected that the value of the ADA token would have plummeted after the smart contract update. However, this has not happened, at least for the time being. ADA price still remains at a great level.
Arbitrum rockets in the DeFi sector
Projects in the DeFi sector have also been going downhill. The TVL, which measures assets locked into these projects, has fallen from a record high of $167 billion during the week.
However, the overall picture still looks really good, and the DeFi sector continues its long-standing winning trajectory.
The DeFi category TOP-10 list hasn’t seen any major changes. Liquidity protocol Aave continues to be the first to follow, followed by Curve, InstaDapp, and Compound, among others.
The top of the list has remained unchanged for a long time.
During the week, Lido, which is the number one staking protocol operating on the Solana and Terra platforms, has suffered the least damage from the Top-10 DeFi projects.
Let’s look at the DeFi market on a blockchain level.
By far the biggest rocket of the week has been Arbitrum, of which most investors have barely ever heard. This is an Ethereum L2 scaling solution that competes directly with Polygon, last spring’s rocket. Arbitrum is developed by a company called Offchain Labs.
Ethereum’s scaling solutions are direct competitors to platforms such as Solana and Binance Smart Chain, which attract users with fast and cheap transactions. Polygon and Arbitrum solve exactly the same problem.
If you want to learn more about Ethereum’s scaling solutions, check the video below.