Bitcoin and the cryptocurrency market have returned to the red. According to market capitalization, the first crypto suffered a 22% drop in 24-hours. This could put other digital assets at risk of falling into support zones.
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According to Coingecko data, Bitcoin was the top-performing asset at the time this article was written. Only Binance Coin (BNB), and Ethereum (ETH) were close behind. BTC’s price trades at $37,600 with a 7% loss over the past week.
Solana (SOL), which suffered a significant network outage, records a loss of 16% and is now the most underperforming cryptocurrency according to market capital. Terra’s native cryptocurrency LUNA closely follows with a 15.5%.
These losses are small when you compare them to the other top 100 cryptocurrencies by market capital. The ranking of tokens like Shiba inu (SHIB), and Avalanche, (AVAX) was higher than the rest. Now they can lose up to 20% just in one week.
Arcane Research recently reported that smaller cryptocurrency have not performed well in current market conditions. Investors seem to be fleeting to “safety” as the appetite for risk decreases pending a potential 50 basis point increase from the U.S. Federal Reserve (FED).
While Bitcoin and larger cryptocurrencies have been showing a correlation with a 16% loss for April, Arcane Research’s small-cap index and mid-cap index are trending lower. Both the former and the latter record losses of 30% and 29% respectively.
Conversely, Bitcoin’s dominance has been moving opposite to small coins. The metric currently stands at 42% and has a good chance of expanding as long as macro-conditions remain unfavorable. Arcane Research noted:
Stablecoins have also been gaining popularity. UST, the algorithmic stabilizecoin that entered the top 10, has become the first to do so. There are currently three stablecoins in the top 10, as well as four within the top 11, which illustrates the current safety flight.
How to Expect Bitcoin in the Short Term
FTX Access has also released a separate report that claims 50 bps price increases are being priced for FED meetings. These would mean that interest rates will be around 2,5 or 2.5 bps by 2022.
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FTX Access believes that the market can see relief if there’s not a surprising announcement from the financial institution.
Powell’s tone will be interesting but without raising +75bps or increasing the pace of QT it’s a high bar for a hawkish surprise. While some may be encouraged by this, the sentiment is not great.