Crypto Markets are Back to Bitcoin (BTC) Season
Bitcoin (BTC) again proves its primacy against altcoins. With new assets created over the years, BTC has always kept a dominance of at least 30%. In the past few days, all coins and tokens retreated again, leaving BTC with a 46.2% share of the entire cryptocurrency market capitalization. After an idle weekend, BTC shot up to $31,229.21.
Weekend trading remains weak for BTC, with trading volumes down by half compared to weekdays. June is predominantly a month in the green for BTC, though June losses were also typical of the bear cycles in 2013 and 2018. However, the 2020 and 2021 anomalies also ended the month of June with a net loss.
BTC also completed the challenge of breaking its longest streak of weekly losses. So far, BTC had a net loss for nine weeks in a row, managing to close above $29,442 to end the week in the green.
BTC has not visited those levels of dominance since May 2021, though still not near its peak dominance above 60%. This time, the rising trust in BTC stems from its relative safety compared to altcoins. The biggest risk turned out to be crypto stablecoins, which promised an unchanging price but also lost their peg and erased billions in value.
This time, however, the influence of Ethereum (ETH) and the collection of smaller altcoins is diminishing as well. With ETH under $1,800, there is little to support the circular flow of collaterals in DeFi. For now, the system works because of relatively steady algorithms that avoid spillover effects.
The value contained within DeFi sank down to about 54B, down from more than 100B during peak times.
BTC Survives Above $30,000
The recent price of BTC is deviating from previous models that saw a bull market and a six-digit valuation in 2022. However, the longer BTC spends around $30,000, the more confidence in the coin. The past few weeks showed small-wallet accumulation continued, and former big whales held their coins.
With what BTC did in the two years since March 2020, there are still hopes the leading coin can rally. Additionally, BTC generally rallies in a short timespan, despite the long sideways movement.
The overall prediction for 2022 remains subdued, with little space for a dramatic run. In the meantime, the debate is still out on how low the market bottom will be this time. The next six months are mostly viewed in a negative light regarding the potential of BTC to regain attention and rally.
BTC is still not moving onto exchanges for mass selling, suggesting more willingness to wait out the market cycle.
Based on the Rainbow Model, BTC is not undervalued, but may be in an accumulation stage. There is no way to predict the rally, but a long-term bet on BTC has driven holding behavior until recently. The other encouraging factor is the ease of absorbing the selling from Terra LFG, which is an estimated 80K BTC.
Accumulation may also move through other dips before establishing enough bullish attitudes for a rally.
However, there are doubts that BTC will face another decade of “hot money”. Instead, the coming months will show how the European Central Bank and the US Fed may bring back hawkish interest rate policies, limiting the potential of speculative assets. BTC now moves together with tech stocks, which are also losing after a decade of easy investment.
TRON Keeps Minting USDD
The TRON DAO has already minted above 669M USDD stablecoins, adding about 40M new coins in the past week. TRX remained stable at $0.081, but with rather bullish predictions of jumping to a higher range.
This is a relatively slow pace of growth compared to boom times for Tether (USDT), when adding 300M tokens per day was a regular event.
The growth of USDD may also make use of the bear market, especially if the TRON ecosystem offers passive earnings. The biggest task of TRON is to offer enough collateral, but also gain trust to avoid another Terra LFG scenario. Algorithmic stablecoins also sometimes manage to recover, as in the case of WAVES-powered Neutrino USD (USDN). The asset slowly moved up to its dollar peg, though still hovering around $0.98.
Currently, Terra LFG is going through another slow-motion disaster, as the new LUNA asset is also losing value rapidly. After a few days above $6, LUNA sank toward $5 and dipped to the $4.90 range briefly. Luna Classic, or LUNC, is in freefall, losing another 90% of its value in days.
At the same time, several protocols are taking up LUNA once again, building DEX and other value-locking propositions. However, the success of altcoin projects may not arrive without also going through a BTC bull market. Even with BTC collateral, most DeFi is viable during BTC and ETH growth cycles.
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In Part 3 we look at more advanced trading strategies including flags, false breakouts and the rejection strategy
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