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Market review 9/27: China’s crypto ban affected the market

China’s announcement to ban cryptocurrencies caused a small crash in the cryptocurrency market. Bitcoin’s dominance has remained the same. DeFi sector continues strong and many smart contract platforms have seen positive price development.

Bitcoin’s price returned to the previous week’s level

Bitcoin price is about $44,000 at the time of writing. This is a couple of percents down from the price we had a week ago. The price of Bitcoin went even lower during the week but returned back almost to the level where it started from.

The graphic below shows Bitcoin’s daily price development during the summer and early autumn. The blue line is the 50-day moving average and the turquoise line is the 200-day moving average.

btc20210927

The main reason for the price drop was China’s announcement to ban cryptocurrencies. We have heard this many times over the years, but it was once again enough to create fear and uncertainty among investors.

As you can see from the image below, it’s been historically a good idea to buy the dip caused by China.

Investors are also concerned because the price of Bitcoin has fallen below the 50-day and 200-day moving averages. Just two weeks ago, we saw a classic bull signal called the Golden Cross. This occurs when the 50-day and 200-day moving averages cross each other when moving higher. However, this signal was not strong enough against China’s ban news.

As for Bitcoin’s on-chain data, the outlook is still largely positive. A good example of this is the coins owned by short-term holders.

Whales have been actively buying dips over the past few weeks. Coins have been increasingly transferred to the wallets of the whales or “strong hands”.

Let’s look at the wallets holding at least one hundred bitcoins. They have increased their holdings by as much as 80,000 bitcoins! Similar data has been seen throughout September.

Big investors seem to be preparing for a new price rally.

September has traditionally been a weak month for Bitcoin. This year made no exception. If history repeats itself, a price rally is expected for the rest of the year. We, too, believe that there are still many days left in this bull market.

No big changes in Bitcoin dominance

Bitcoin’s market dominance is 41.81 % at the time of writing this article. A week ago, the corresponding figure was 42.28%. The trend has been slightly downwards.

This basically means that altcoins have taken over the market a little more. You can track Bitcoin’s market dominance from the CRYPTOCAP index.

cryptocap20210927

In the last week’s market overview, we brought out the possibility of a larger change in trend. Bitcoin’s market dominance had plunged since the beginning of August and made a sudden correction. However, the dominance seems to have stabilized.

Smart contract platforms are performing well

Altcoins have performed positively over the past week. Compared to Bitcoin, only Binance Coin and Dogecoin are down in the top 15 list of altcoins.

Below you can see the current status of the “blue chip” cryptocurrencies from Coinmarketcap. The numeric values give you the price development compared to Bitcoin (not vs. USD).

altit20210927

Solana has been the hot coin of this autumn. Last week, however, the SOL token had a dip. This was due to some unexpected technical issues on the platform. Now Solana is back on the green territory.

Avalanche and Terra have also performed very well.

The top 10 cryptocurrency ranking is full of smart contract platforms. Even Dogecoin is about to drop out any day. Smart contract platforms thrive thanks to the ongoing NFT boom. The DeFi sector is also spreading more and more to new platforms besides Ethereum.

Outside the top 15 list, Tezos and Elrond have also done well. Both of these are more than ten percent up compared to Bitcoin. The early-year rocket Binance Coin has been less successful recently. Binance Smart Chain is clearly not in the investors’ radar at the moment.

DeFi sector is relatively unchanged

Last week we reported how the TVL (Total Value Locked) of the DeFi market was green even if the rest of the market was on a downward trend. The same trend continues this week. TVL has grown by around ten billion, although China’s banning news has made the market look generally weak.

All images are screenshots from defillama.com.

defi20210927

The DeFi sector looks stronger than the rest of the market. In September, the sector’s TVL appears to have stabilized between 175 billion and 200 billion.

Let’s look at the ranking at the protocol level.

defiprotokollat20210927

There was a significant change a week ago when Curve took over Aave at the top of the table. The situation has remained the same. Curve Finance has increased its TVL more than Aave and kept the number one ranking.

MakerDAO has climbed third on the list by growing its TVL 35 percent. This is the most significant change of the week.

This is how the blockchain ranking looks like.

defichains20210927

Ethereum’s TVL has increased as much as $7 billion during the week. The TVL of the entire DeFi market has grown by 10 billion, so Ethereum has hawked a large portion of this number.

Terra is on the rise and threatening Solana, which has taken third place. Binance Smart Chain seems to have stabilized its 2nd position and Solana no longer threatens it as much as it did a couple of weeks ago.

OKExChain, which became the eighth largest platform last week, has lost about 60 percent of its TVL and dropped back to more realistic levels. Klaytn has taken rank #8.

Photo by Anna Nekrashevich from Pexels

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