Bitcoin (BTC) price plummeted this week as a hotter-than-expected Consumer Price Index (CPI) report showed that high inflation remains an ongoing challenge despite a wave of rate hikes by the US Federal Reserve. Interestingly, the market’s negative reaction to high CPI pressure appeared to be priced in by investors, and BTC and Ether (ETH) prices all recouped their intraday losses to end the day in positive territory.
A quick look at Bitcoin’s market structure shows that even with the post-CPI pressure drop, the price continues to trade in the same price range it has been in for the past 122 days. Adding to this dynamic, Cointelegraph market analyst Ray Salmond reported on a unique situation where Bitcoin’s open interest is at record highs while its volatility is also near record lows.
These factors, along with other indicators, have historically preceded explosive price movements, but history will also show that predicting the direction of these movements is nearly impossible.
Barring multiple metrics suggesting a pivotal price move is brewing, Bitcoin is still doing more of what it has been doing for the past 4.5 months. With that in mind, maybe it’s time to look elsewhere for emerging trends and potential opportunities.
Here are a few data points that never cease to amaze me.
New rotations will emerge
ETH’s price has lost its luster in the post-merge era and the asset is now reflecting the bearish trend dominating the rest of the market. Since the merger, ETH’s price is down 30% from its $2,000 peak, and it’s likely that much of the speculative capital that was behind the optimistic merge narrative is now in stablecoins looking for the next investment opportunity Looking for.
Aside from being an asymmetric performer over the past four months, Cosmos (ATOM) also defied the market downtrend by posting a monster rally from $5.40 to $16.85. As extensively covered by Cointelegraph, oversold conditions coupled with the hype of Cosmos 2.0 supported the bullish price action seen on the altcoin, but this chart continues to capture my imagination.
ATOM emission plan (old vs. new). Source: CosmosHub
According to Cosmos’ revised white paper, ATOM’s current offering will dynamically adjust to the supply and demand of its deployment. As shown in the chart above, when Cosmos 2.0 “takes hold” in the first 10 months, the issuance of new ATOM tokens is high, but after the 36th month, the asset becomes deflationary.
ATOM/USDT 3-day chart. Source: TradingView
From a technical analysis perspective, ATOM’s price appears to have hit a local top since the months leading up to Cosmos 2.0 were a buy the rumor, sell the news type event, but it will be interesting to see what comes of it comes out The price of ATOM as the market approaches the 20th month in the chart above.
Related: Price Analysis 10/14: SPX, DXY, BTC, ETH, BNB, XRP, ADA, SOL, DOGE, MATIC
Keep an eye on the activity of the Ethereum network
Ether emissions drop after merger. Source: Delphi Digital
Since the Ethereum merger, Ether issuance has fallen by 97% and while the price has declined significantly, investors could keep an eye on Ethereum network activity in the coming months, developments involving ETH stakes via Decentralized Finance (DeFi) and institutional products, along with gas spikes (associated with network activity).
Ether Supply Dynamics. Source: Delphi Digital
While the price could succumb to bearish pressures in the short-term, it is possible that ETH’s price could react positively to these developments as the market turns around as new trends trigger increased use of DeFi products.
Post-merger, BTC price action will likely remain king
While new trends may emerge in different altcoins, it’s important to remember the broader context in which crypto assets exist. The world economy is struggling and persistently high inflation remains a problem in the United States and many other countries. Bond prices are whipping up and an impending debt crisis is making itself felt on a daily basis. Risky assets like cryptocurrencies are incredibly volatile, and even the strongest price trends in crypto (whether supported by fundamentals or not) are subject to the whims of macro factors such as stock markets, geopolitics, and other market events that affect investor sentiment.
With this in mind, Bitcoin remains the largest asset by market cap within the crypto sector, and any strong move in BTC price is bound to support or suppress the microtrends that may be gaining momentum in the market. There is still a possibility of a strong downtrend in the price of bitcoin, so traders are encouraged to calculate the investment size based on their own risk appetite, and while several metrics could support opening long positions in various crypto assets, it still appears too soon to be complete ape inside.
This newsletter was written by Big Smokey, author of The Humble Pontificator Substack and resident newsletter writer at Cointelegraph. Every Friday, Big Smokey will be writing market insights, trend guides, analysis and early bird research on potential emerging trends in the crypto market.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.
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