06 Jun 2022

The return of the Bart formation

Bitcoin is down 6% in the last seven days, and a previously relevant bear market pattern has re-appeared, the infamous Bart formation.
Market update (8).svg
The Bart formation first appeared back in 2018 and 2019, when we often saw bitcoin oscillating around a price, making short-lived pushes up or down before reverting to the previous price levels. These price movements resemble the infamous hair of Bart Simpson and are analogous to the price pattern seen in the market since the May 12th crash.
Source: Tradingview (Coinbase, Binance US)
Ether (-12%) and BNB (-11%) have underperformed BTC over the last seven days. BNB followed BTC closely up until the weekend but then began underperforming. Monday evening, news reached the market that the SEC was investigating whether BNB was a security when it was sold in 2017, leading BNB to plunge.Over the last week, correlations both within the crypto market and to the S&P 500 have declined further. We noted last week that the unusually high correlations were showing signs of declining, and the trend has continued over the last seven days. Related to correlations, we see that the entire BTC sell-off since April has occurred during U.S. trading hours. Chainlink is the top performer over the last seven days, bringing back fresh memories of LINK’s outperformance of the rest of the market during the 2018-2019 bear market.
Source: CoinGecko,
The crypto flight to safety continues
The crypto market has continued its poor performance into June. So far in the month, bitcoin has decreased by 1%. The Large Cap Index has declined 3%, primarily due to disappointing performances by ETH and BNB, the two largest components of the index.
Source: Bletchley Indexes
Due to its outperformance, bitcoin keeps taking an increasing slice of the crypto market pie. The bitcoin dominance sits at 46.3%, the highest level since October 2021.The poor performance of ETH and BNB over the past seven days is reflected in their shares of the total crypto market cap decreasing by 0.63 and 0.17 percentage points, respectively.
Source: CoinMarketCap
Not only is bitcoin taking market share from altcoins. Stablecoins have also increased their dominance lately, again proving that they are the preferred safe-haven assets of the crypto market during market turmoil. This article elaborates on the recent flight to safety tendencies in the crypto market by showing how the bitcoin + stablecoin dominance has increased lately.
One month of extreme fear in the crypto market
According to the Fear and Greed Index, crypto market participants haven't gotten a break from extreme fear since May 5th. Such a prolonged period of extreme fear last happened after the Covid crash in 2020, when the Fear and Greed Index indicated extreme fear for 49 straight days. While the sentiment in the crypto market continues to stay at bottom levels, the outlook has somewhat improved in the general financial markets, as indicated by CNN's Fear and Greed Index for the stock market that started ticking up from the bottom in the middle of May.
The bitcoin spot volume normalizing at around $4bn
The 7-day average real bitcoin trading volume* sits at $3.7 billion, a slight decrease over the past seven days. The spot volume continues stabilizing in the $3.5 - $4.5 billion area, which we have become accustomed to during the last year.
Source: Skew, Tradingview (Binance, Binance US, Bitfinex)
Bitcoin’s volatility stabilizes at 4%
Bitcoin’s 30-day volatility has stabilized at around 4%, slightly above the yearly average 30-day volatility of 3.6%. Historically, the volatility has tended to spike when the market sentiment changes. The crypto market has now been in a condition of "extreme fear" for more than one month, and we can see that the volatility increased at the beginning of May, when fearful market participants rushed for the doors. Since then, the volatility has stabilized.
Source: Tradingview (Coinbase)
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