Cryptodevys on the rise
The total market cap of crypto devices has surged to an all-time high of over $ 2,000 billion this week. This was partly due to bitcoin, which has had a market capitalization of over $ 1,000 billion for more than a week, but the demand for various alternative cryptocurrencies (altcoins) has also increased significantly recently, possibly doubling within a few months. Market cap of cryptocurrencies.
While in most cases banners are related to bitcoin, now the main role of various altcoins is like ethereum, bittorrent, xrp, tron or stellar. Almost without exception, these crypto devices have produced double digit percentage increases in recent days.
This is partly because the price of Bitcoin has been in a relatively narrow range over the past few weeks and investors have started looking for high-potential or higher-return cryptocurrencies.
Meanwhile, while bitcoin did not rise sharply, the market cap of the crypto device also became relatively stable close to $ 1.1 trillion, but thanks to the rise in altcoins, Bitcoin’s share in total cryptocurrency market capitalization was initially from 73 percent to 57 percent. fell. of the year. volt.
The rally in altcoins can be explained primarily by the fact that the Bitcoin price is fixed between $ 55,000 and $ 60,000, creating an optimistic market environment that allows investors to explore other cryptocurrencies in the market. All of this coincided with the decline in bitcoin dominance, one of the key indicators of the current market cycle.
It’s not outstanding, but it has performed well in recent days for ethereum, which still has a new historic high and remains the second largest crypto device after bitcoin. The latter is no accident, most so-called DeFi (decentralized finance) applications run on ethereum blockchainen and are expected to grow in popularity in the future. DeFi essentially covers automated, blockchain-based software protocols that could one day replace banks and Wall Street trading houses.
This is important because in the current “altcoin season”, crypto devices that belong to so-called smart contract platforms and can therefore compete with Ethereum and even complement Ethereum typically performed exceptionally.
Another reason behind the altcoin rally is the growing popularity of the stablecoin. These are digital tokens whose value is in real-world currency, usually dollars.
While the emergence of institutional investors played a key role in the rise in Bitcoin price in 2020, the same cannot be said for altcoins, where small investors and early adopters can play a more important role. In the case of Bitcoin, the emergence of institutional investors has brought stability to the market, and while this is beneficial for many investors, it deprives early adopters of the “wild west vibe” that caused many people to love crypto devices. Additionally, the high volatility of altcoins can be attractive to some as they promise higher returns.
Arthur Cheong, founder and portfolio manager of a DeFi-based cryptographic fund called DeFiance Capital, reported that the growing interest in altcoins came primarily from retail investors. Cheong said that more investors who did not do more serious research before making their investment decisions are returning to the market and the volume of trade in South Korea has increased, mainly due to retail cryptocurrency investors.
Something might turn around
According to CoinDesk and Coin Metrics, Ethereum’s leadership is increasingly being questioned (partly for cost) as there are blockchains like Tron where daily transaction numbers are already consistently exceeding Ethereum. The number of stablecoin transactions on the Tron blockchain also exceeds Ethereum.
Competition between public blockchains is a good thing. It is true that starting new projects in Ethereum is almost impossible because no one wants to use projects with thousands of dollars in mining costs and low transaction speeds.
Justin Sun, founder of Tron blockchain and CEO of BitTorrent, said.
Although Bitcoin’s market dominance has declined, analysts say the increased interest in altcoins will eventually benefit Bitcoin. On the one hand, bitcoin’s volatility may decrease, on the other hand, these investors can decide who will be the winners and losers among the altcoins required for all altcoins to become a usable long-term asset. Ki Young Ju, CEO of CryptoQuant blockchain data provider, said capital flows will eventually turn to bitcoin.
Moreover, in recent months, several key institutional investors and large corporations have taken steps to legitimize and strengthen the role of bitcoin and cryptocurrencies as investment and payment instruments:
- Bitcoin is now available on PayPal, a gateway between fiat currency and the crypto ecosystem, and the company also announced that its customers can now pay with cryptocurrencies at merchants using the platform.
- Tesla bought Bitcoin in early February and will also accept the crypto device as a payment instrument starting March 24.
- BlackRock, the world’s largest fund manager, made bitcoin available for two funds.
- Mastercard has also announced plans to add certain cryptocurrencies to the payment system.
- BNY Mellon, the oldest bank in the United States, also announced that it will enable its customers to hold and transfer cryptocurrencies.
- Counterpoint Global, part of Morgan Stanley, is also considering entering Bitcoin.
- Visa announced that it will allow the use of stablecoins called USDC to process transactions in the payment system.
Among other things, Portfolio analyst Károly Kövesy, Coincash.eu co-founder and CEO Attila Mogyorósi discussed this in our recent podcast:
What does technology say?
Throughout this year, Bitcoin’s volatility has not been as low as it is now. However, this does not mean uncertainty or a more serious level of expectation, rather it is due to its cyclical nature. While retesting the exchange rate’s previous boom level around $ 59,000 failed, the medium-term moving average once again rushed to the flagship’s aid. This is definitely a positive sign, as many buyers are still entering the market, indicating that the setbacks are being used by existing ones for new purchases. The instrument’s momentum dwindled slightly as money inflows slowed, but the narrow band it has just created for itself is a more positive sign and makes risk management easier. So the initial slight support is at $ 57,000, the resistance is at the already known $ 59,000. Both the medium term and especially the long term uptrend are alive and well.
While the trend in Ethereum is technically not as good as Bitcoin, in terms of relative strength, the past three weeks have changed the balance of power slightly. While Bitcoin failed to hold its new peak, the price of ETH surpassed the $ 2,000 resistance. The somewhat more “erratic” nature of the increase makes risk management more difficult here, and performance is still very high. It is noteworthy how much traffic was attracted until the fall at the end of February, where we could see a real gigantic battle between demand and supply, the winner of which was victorious. But now we are seeing rather quiet progress, where the lack of sellers is more characteristic than the power of the buyers. Volatility is also relatively high, at least compared to last year, so Ideally, Ethereum would be consolidating the last few weeks in a narrow, lateral band and then leaving it with serious buying interest., sooner or later instead, the speculator who makes a lot of profit, easily lowers the exchange rate. The $ 2,000 level can now provide natural support for this.
Stellar’s chart shows that unlike the two major crypto devices, there is much more maturity and a sea of liquidity. Movements are more erratic, daily candles are usually too long, and the cyclicity of the volatility is almost absent. But sometimes, at extreme risk, it is these types of devices that can blow up the biggest of them. Stellar now has a good chance of doing so, after two days of increased traffic with many new customers entering the market. As market players are now looking for alternative players in the second major mid-term cryptocurrency buying wave, XLM has gained new momentum. Of course a swallow is not making summer yet, but it really looks like spring is here: the exchange rate is slowly testing a fundamental resistance of 0.57. Even though it hasn’t been seen since January, it’s hard to decide if you still need a short break here after a strong day, but due to the crazy features of the exchange rate, the new peak can happen at any moment. Finding support levels is also not easy, but closing below or around the opening rate of the accumulation day i.e. below 0.43 would definitely be a negative sign.
By mid-March, we had already drawn attention to the fact that Ripple is in a pre-explosion state in the coming days. It had increased its price by 30% in the last two weeks of March, which was then 0.44, but on weekends it added so much in two days that it meant doubling the exchange rate in less than a month. . This opens up whole new horizons for XRP, even reaching 2018’s highs when the exchange rate rises above $ 3. Like Stellar, the properties of the movements are hardly interpretable here, they are characterized by manic waves that swirl suddenly and then die. Here too, stops are extremely difficult to identify, so only those who believe in long-term bullishness can make major corrections even within a day. The previous wide six-month resistance at 0.65 is now a strong support. Due to the much larger bounce from Stellar, it would be even more justified to create a consolidation band here before further bullishness, but the probability of this is small, possibly due to the very high proportion of short-term speculators.
Despite the overwhelming numbers, the most glorious boom was produced by Tron, not Ripple. The system behind the cryptocurrency, specializing in world repayment with little exaggeration, is only four years old, but already contained a speculative bubble in late 2017 and early 2018. Whether the incipient rapid rise is too early to make a decision, but without some corrective adjustments or consolidations that will carry strong buying interest for a short time, we can be sure that sooner or later the instrument will have a big drop as it is. full of speculative positions that market participants will want to close over time. So it would be good to see a more serious correction here as well. Two days ago the large upper shadow had already pointed to the need for this, but has not yet resulted in snow realizations in a quiet bed. While the TRX trend looks very strong, it is better to reach it only after some reorganization. The more serious support is therefore only below 0.10.
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