Blue-Chips Lead Cryptos in the Aftermath of 'Meme' Rally
• Bitcoin (BTC, Tech/Adoption “A-”) and Ethereum (ETH, Tech/Adoption “A-”) are back up today along with a few other blue chips.
• Meme stocks and Dogecoin (DOGE, Technology/Adoption “C+”) are all down after last week’s huge pump.
• ETH bounced off its 21-day moving average and is trading at all-time highs, while DOGE is back down to around three cents after trading as high as ten cents on some exchanges on Jan 29.
Since trading was halted on some “meme stocks” last week, prices have sharply fallen. Attention quickly shifted over to Dogecoin, which ripped off to astronomical all-time highs. But now, both “meme stocks” and the “meme crypto” have fallen back to reality.
Today, we’re seeing prices rise in the blue-chip cryptocurrencies, as both BTC and ETH are trading up more than 5% as of around 12:30 p.m. Eastern. Prices of meme stocks may be trading down right now due to stifled buying, a hypothesis that won’t be validated until trading limits are lifted and true demand is shown.
Perhaps this is a signal that investors have shifted their focus back to real investments instead of quick pumps.
Either way, today we’re shifting away from the “meme” thing and back entirely to cryptocurrencies — specifically blue-chip assets.
BTC is currently trading near $35,000, as fundamentals have strengthened even in the days since the price recently dove below $30,000.
Bitcoin’s relative strength index (RSI), which peaked in clearly overbought territory around 90 in early January, is now closer to 55. That suggests the asset is no longer overbought and may have room to run from here. It’s currently testing its 21-day moving average, and a close above that metric would be a bullish signal that might spark another surge to a new all-time high.
Here’s Bitcoin in U.S. dollar terms on Coinbase:
Ethereum is also experiencing a good trading day, threatening new all-time highs after testing its 21-day moving average yesterday and bouncing sharply.
ETH’s RSI also breached overbought territory in early January but is now near 63, also signaling there’s plenty of upside in the second-largest crypto asset. It is still channel-trading today, although a close above the old all-time high would be bullish and could lead to a breakout from that channel.
Here’s ETH in U.S. dollar terms on Coinbase:
Upside breakouts for both Bitcoin and Ethereum would, of course, be bullish for the overall market and could lead to additional breakouts across the board.
Elsewhere in the market, we’re seeing a nice breakout on Cardano (ADA, Tech/Adoption “B-”), which is trading up about 15% on the day and was up more than 25% over a 48-hour period after bouncing off its 21-day moving average yesterday.
Here’s ADA in U.S. dollar terms on Binance:
Notable News, Notes and Tweets
• MicroStrategy Inc. (Nasdaq: MSTR), led by founder and CEO Michael Saylor, continues to buy Bitcoin.
• Miami Mayor Francis Suarez thinks Bitcoin will be the “biggest story of the next few years.”
• Our understanding of the value of stocks may have fundamentally changed after last week’s fiasco.
• Ethereum setting new all-time highs is making waves on Crypto Twitter.
What’s Next
Today has been characterized by the movements in blue-chip cryptocurrencies; DeFi assets have been pretty quiet today.
It isn’t uncommon for the bigger cryptos to suck the air out of the room for smaller, more speculative assets. And “decentralized finance” is, for all its recent explosive growth and all its massive potential, still basically speculative.
Again, a breakout on the BTC and ETH charts would be good for DeFi and the crypto market as a whole, so today, all eyes are on No. 1 and No. 2.
Best,
Alex
