Cryptodes are on the rise
The total market capitalization of crypto devices climbed to a new record high of more than $ 2 trillion this week. This was partly due to bitcoins, which have had more than $ 1,000 billion on the market for more than a week, but there has also been a significant increase in demand for various alternative coins (altcoins) recently, which are likely to double in just a few months. . market value of cryptocurrencies.
Although in most cases these are bitcoin banners, the main role is now played by various altcoins ethereum, bittorrent, xrp, tron or stellar. Almost without exception, these cryptocurrencies have yielded a double-digit percentage increase in recent days.
This was partly due to the fact that the price of bitcoins has been in a relatively narrow range over the past few weeks, and investors have begun to look for cryptocurrencies with high potential or higher returns.
By the way, because bitcoin did not grow rapidly, the market capitalization of cryptodevice also became relatively stable at almost $ 1.1 trillion, but thanks to the altcoin rally, the share of bitcoins in the total market capitalization of cryptocurrencies fell to 57 percent from 73 percent at the beginning of the year.
The altcoin rally can be explained primarily by the fact that the price of bitcoins has stabilized between $ 55,000 and $ 60,000, creating an optimistic market environment that allows investors to discover other cryptocurrencies in the market as well. All of this coincided with a decline in the dominance of bitcoins, which is one of the key indicators of what market cycle we are currently in.
It’s not remarkable, but it has done well in recent days for ethereum, which is still at a new historical high anyway and remains the second-largest cryptocurrency after bitcoin. The latter is no coincidence, most so-called DeFi applications (decentralized funding) run on ethereum blockchainen and are expected to grow in the future. DeFi essentially covers automated programming protocols based on blockchains that will one day be able to replace banks and department stores on Wall Street.
This is important because in the current “altcoin season,” cryptocurrencies, which belong to so-called smart contract platforms and can therefore compete or even complement Ethereum, have usually proven to be exceptional.
Another reason for the altcoin rally is the growing popularity of stablecoins. These are digital tokens whose value is tied to the real currency, which is usually the dollar.
Although the emergence of institutional investors has played a key role in raising the price of bitcoins in 2020, the same cannot be said for altcoins, where small investors and early adopters may play a more important role. In the case of bitcoins, the emergence of institutional investors has brought stability to the market, which is beneficial to many investors but deprives early users of the “vibration of the Wild West” that makes many like cryptocurrencies. In addition, the high volatility of altcoins may also be attractive to some, as they promise higher returns.
Arthur Cheong, founder and portfolio manager of a DeFi-focused cryptographic fund called DeFiance Capital, reported that increased interest in altcoin comes primarily from small investors. Cheong said more and more investors are returning to the market without conducting serious research before making investment decisions, indicating an increased volume of trading in South Korea, largely as a result of cryptocurrency investors.
Things can spin
Ethereum’s management is increasingly questionable (in part because of the cost) as there are already chain chains like Tron where daily transaction numbers already consistently exceed Ethereum, CoinDesk and Coin Metrics claim. The number of tether (stablecoin) transactions in the Tron blockchain also exceeds the number of Ethereum.
Competition between public blockchains is a good thing. It’s true that it’s almost impossible to start new projects at Ethereum because no one wants to use projects that have thousands of dollars in mining costs and slow transaction speeds.
Said Justin Sun, founder of the Tron blockchain and CEO of BitTorrent.
Although the market dominance of bitcoins has declined, analysts say growing interest in altcoin will eventually benefit bitcoin. On the one hand, the volatility of bitcoins can be reduced, and on the other hand, these investors can decide who will be the winners and losers among altcoins, which is necessary for all altcoins to become a useful long-term asset. Ki Young Ju, CEO of data block provider CryptoQuant, said capital flows will eventually return to bitcoin.
In addition, in recent months, several important institutional investors and large corporations have taken steps to legitimize and strengthen the role of bitcoins and cryptocurrencies as investment and payment instruments:
- Bitcoin is now available on PayPal, a gateway between the fiat currency and the crypto ecosystem, and the company has also announced that its customers can now pay with cryptocurrencies at merchants using the platform.
- Tesla bought Bitcoin in early February, and from March 24, it will also accept cryptocurrencies as a means of payment.
- BlackRock, the world’s largest fund manager, has made bitcoin available to two funds.
- Mastercard has also announced plans to add some cryptocurrencies to its payment system.
- BNY Mellon, the oldest bank in the U.S., has also announced that it will allow its customers to store and transfer cryptocurrencies.
- Counterpoint Global, part of Morgan Stanley, is also considering tackling bitcoins.
- Visa has announced that it will allow the use of stabilcoin, called the USDC, to process transactions in its payment system.
Károly Kövesy, portfolio analyst, Attila Mogyorósi, co-founder and CEO of Coincash.eu, discussed this in our last podcast, among others:
What does technology say?
Throughout this year, the volatility of Bitcoin has not been as low as it is now. However, this does not imply uncertainty or a more serious level of expectation, but stems from its cyclical nature. Although re-testing the previous burst exchange rate level of around $ 59,000 was unsuccessful, the medieval moving average again came to the aid of the leader. This is certainly a positive sign, as it shows that many customers are still entering the market and that the decline is being spent on new purchases. The momentum of the instrument has slowed slightly as cash inflows have slowed, but the narrow band he has just set up for himself is a more positive sign, making risk management also more user-friendly. The first slight support thus amounts to $ 57,000, and the resistance to the already known $ 59,000. Both the medium-term and especially the long-term upward trend is alive and well.
Although the trend in Ethereum is not as nice from a technical point of view as Bitcoin, the power ratio has changed slightly in terms of relative strength over the last three weeks. While Bitcoin was unable to maintain a new high, the price of ETH clearly broke through resistance at $ 2,000. Slightly more “irregular” growth in nature makes risk management difficult, and performance is still remarkable. Surprisingly, how much traffic it captured at the end of February, here we could see a real giant battle between supply and demand, which was won first. Now, however, we are seeing rather quiet progress, here the lack of sellers is more characteristic than the strength of buyers. The volatility is therefore relatively high, at least compared to last year ideally, Ethereum should be consolidated in a narrow, sideband over the last few weeks and then seriously bought out of it, instead of a speculator with very large profits sooner or later easily knocking the exchange rate. A level of $ 2,000 could now provide natural support for this.
The Stellar graph shows much greater maturity and lack of sea liquidity, as opposed to two major cryptocurrencies. The movements are more irregular, the daytime candles are often very long, and the cyclicity of volatility is hard to find. Sometimes, however, such high-risk devices can blow the most. Stellar now has a good chance of doing so after two days of growing traffic with plenty of new customers entering the market. As market players are now looking for replacement players in the second big medium-term shopping wave of cryptocurrencies, XLM has got a new impetus. The Swallow, of course, isn’t doing summer yet, but it really seems like spring is already there: the course is slowly testing a key resistance of 0.57. It’s hard to decide if you still need a short break here, after just one strong day, even if we haven’t seen it since January, but a new peak can happen at any time due to the crazy exchange rate characteristics. It is also not easy to find a level of support, but it would certainly be a negative sign to close below or around the opening day of the accumulation day, i.e. Under 0.43.
In mid-March, we already drew attention to the fact that Ripple is in a pre-eruption state, which happened in the coming days. At the time, it had already raised its price by 0.44 by 30% in the last two weeks of March, and on weekends it added as much in two days, which meant more than doubling the exchange rate in less than a month. This opens up completely new horizons for XRP, even reaching its peak in 2018, when the exchange rate crossed even over $ 3. Like Zvezdni, it is not difficult to explain the characteristics of the movements here, they are characterized by sudden rotation and then dying of manic waves. Here, too, it is extremely difficult to determine stops, so only believers in a long ascension can endure major corrections, even in one day. The previous extensive six-month resistance at 0.65 is now strong support. Due to a much larger jump than with Stellar, it would be even more justified to create a consolidation band here before further ascent, but the likelihood of this is small due to the supposedly very large proportion of short-term speculators.
The most spectacular eruption, despite the huge numbers, was not created by Ripple, but by Tron. The cryptocurrency system, which specializes in global buying with little exaggeration, is only four years old, but by the end of 2017 and early 2018, it already contained a speculative bubble. Whether the rapid rise that has just begun is too early to decide, but we can be sure that without some corrective adjustments or consolidations that will keep strong buying interest for a short time, sooner or later there could be a big drop, as an instrument full of speculative positions that market participants will eventually want to close. Therefore, it would be good to see a more serious correction here as well. The big upper shadow two days ago already indicated the need for this, but has not yet reached its peak in the realization of profit in a quiet bed. Although the TRX trend seems very strong, it is better to achieve it only after the reorganization. More serious support is therefore just below 0.10.
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