30 Aug 2022

Hawkish Powell sends BTC back to 2017 highs

The crypto market saw yet another downward push this week, leading BTC to retest the 2017 peak of $19,500 over the weekend. BTC is now trailing in the lower end of its 2,5-month-long consolidation range, declining 4% over the last seven days.
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BNB has moved in lockstep with BTC seeing losses of 3% in the last week. ETH, on the other hand, has experienced larger swings, albeit in strong correlation with the rest of the market, as ETH seems to carry higher beta. This is likely caused by more leverage in ETH due to the rapidly approaching Ethereum merge.
Source: Tradingview (Coinbase, Binance US)
The market was mostly flat until Jerome Powell’s hawkish Jackson Hole speech on Friday, where Powell emphasized the FED’s intentions to combat the soaring inflation. Risk assets immediately responded to the downside, and the sell-off was far from isolated to crypto, as Nasdaq saw its largest daily performance since June of -5%.
Source: CoinGecko,
EOS, last week’s top performer, sees considerable downside this week, sliding 20%. Also, Avalanche figures among the worst performers in the last seven days, following rumors of Avalanche actively running smear campaigns through class action lawsuits versus its major competitors.
Bitcoin underperforming the rest of the market in August
The crypto market saw further downside last week, and we are about to experience yet another month of double-digit negative returns across all indexes, with a slight underperformance of BTC vs. altcoins.
Source: Bletchley Indexes, Tradingview (Coinbase)
All altcoin indexes continue to move in tandem in August, with performance ranging from -12% to -10%, as we wrap up another red month in crypto. The Large Cap index is the worst performing index this month, seeing 12% losses. The relative underperformance of Large Caps vs. the other indexes is caused by BTC’s underperformance relative to the rest of the market. BTC has underperformed all indexes in August, seeing a monthly loss of 13%.
Source: CoinMarketCap
In August, BTC saw its market dominance decrease from 41.5% to 39.35%. Meanwhile, ETH saw its market dominance increase from 18.3% to 19.4%, helped by the positive sentiment erupting in ETH, with Ethereum approaching its Merge. As expected in a red month, stablecoins see growing dominance. The top 3 stablecoins have seen their market dominance increase from 13.23% to 14.02% in August.
Market sentiment stabilized in fearful territory
The market sentiment has stayed fairly stable over the past week, even with the latest drop below $20,000. The Fear and Greed Index is now at 27, down from 28 last week, and still in the “Fear” territory. It’s clear that investors are more comfortable with the low $20k price level for bitcoin, as we were deep in the “Extreme Fear” area last time bitcoin touched prices below $20k back in June.
Bitcoin volume sits near yearly lows from April, when excluding Binance
Binance continues to dominate the spot volume following the fee removal in BTC pairs. Over the last seven days, we saw spot volumes averaging at $8bn, far higher than the levels maintained throughout the first half of 2022. Still, when excluding the Binance volume, we see that trading volumes elsewhere reflect the idle spot market activity experienced previously this year. The real volume, excluding Binance activity, better reflects the overall activity in the market, as Binance’s fee removal has made high volume trading strategies economically feasible, likely leading to growing inorganic trading volume on the platform.
Source: Skew, Tradingview (Binance, Binance US, Bitfinex)
Volatility burst last week
The 7-day volatility hit levels not seen since late June last week, as the bitcoin price started dropping lower again. After peaking above 4%, the 7-day volatility dropped a little again this week and is now below 3%. The increased volatility has in general been a result of more movements in the stock market as the fear increased again before the weekend. After seeing bitcoin volatility at unusual low levels, we’re now back to more average levels.
Source: Tradingview (Coinbase)
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