We’re looking at US equity indexes and seeing a clear risk-off tilt.
The S&P, the Nasdaq, and the Dow are all down from their all-time highs. Investors are concerned about a number of factors: China’s economy, the global supply chain issues, the Fed policy, the potential start of tapering, and the infrastructure bill. All in all, it’s pushed equities, gold, and bonds down for several sessions. The only thing gaining is the dollar, as people cycle into cash.
In the crypto space, the picture feels less clear and, interestingly enough, driven by different forces. The correlation with traditional markets seems lower these days.
BTC is decidedly above the 45K support and shows little sign of falling below: This is positive and suggests at least a consolidation at those levels, if not an accumulation. However, it’s worth noting that, except for a brief moment earlier this month, prices haven’t pierced past the 50K mark, either. We’re currently at $45,500.
During this stagnation - if we can call it that - alts have gained market share, broadly speaking. The BTC dominance is down to 41.80. Among the best performers in the past seven days, ATOM has gained more than 50%. We’ve also seen larger coins like DOT or XTZ gain 6%, and outperform BTC. It was also interesting to pick up on privacy coins, such as XMR and ZEC, which have each gained a decent 4%.
We also saw AVAX gain 24% in the past week, thanks to Three Arrows and PolyChain investing an aggregate $270mil in the project.
Away from price action and taking a look at fundamentals, there are two pieces of news that aren’t supportive of higher prices: Korea is tightening its regulations regarding crypto - which might be seen as positive long-term, but is definitely hurting a myriad of smaller exchanges that just can’t comply with the new rules in the short-term. We’re also hearing rumors that the US is investigating Binance on insider trading charges - something that pushed an exec to resign at OpenSea not too long ago.
Something that is yet to really play out but is fascinating to see is the El Salvador implementation of BTC. So far, it hasn’t been as successful or as widely adopted as one would think, but the system works. It has, however, pushed people to sell a lot of the country’s bonds, as investors are doubtful of the added value.
As a last information nugget, a Glassnode chart shows that miners have - so far - been in accumulation mode as they choose to hold onto coins instead of sending them to exchanges or OTC desks to be sold. I’ll let you make of that what you will.
It looks like crypto isn’t correlated to traditional markets, at least not during this past session.
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