• Bitcoin (BTC, Tech/Adoption Grade “A-”) is down roughly 6% today after Elon Musk tweeted a cryptic meme about breaking up with Bitcoin. It’s trading just below the $37,000 price level.
• Ethereum (ETH, Tech/Adoption Grade “A-”) is 7% lower, sitting at about $2,670.
• Bitcoin’s dominance of the crypto market dropped about 1.5% to 42.5%, as Bitcoin mostly lagged the broader market over the past week.
Bitcoin has traded relatively sideways over the past two weeks, and we could easily see this consolidation period lasting up to a couple of months. It will be important to see if the largest cryptocurrency by market cap is able to regain its momentum and lead the broader market higher for a potentially explosive second phase of this bull run.
Traders are still intently looking at key long-term support levels to gauge if the bull market is still intact. Bitcoin has rebounded after briefly touching its recent low near the $30,000 price level, but it still faces the task of overtaking both its 21-week and 200-day moving averages.
Meanwhile, in the short term, the King of Crypto faces resistance from its 21-day moving average. After briefly overtaking it in intraday trading, Bitcoin failed to break out with conviction and bounced lower.
Here’s Bitcoin’s price in U.S. dollars via Coinbase Global Inc. (Nasdaq: COIN):
Ethereum managed to advance higher since last week, but it has given up some of its progress during today’s trading as the broad market pulled back.
Many investors believe that Ethereum has the potential to surpass Bitcoin as the No. 1 cryptocurrency by market capitalization because of its usage as a decentralized finance (DeFi) ecosystem and its decision to shift to a proof-of-stake consensus. However, this would likely require positive momentum for the market in general.
Like Bitcoin, Ethereum managed to briefly overtake its 21-day moving average but couldn’t sustain itself above that level. Ethereum has failed to break out of its recent $2,300-$2,900 trading range, but that is to be expected if Bitcoin and the broader market are facing similar headwinds.
Here’s Ethereum’s price in U.S. dollars via Coinbase:
Index Roundup
We saw more volatility to begin the week, but the last several days showed sideways trading. Overall, trading was largely positive, with many large- and mid-caps able to notch some gains. But the small-caps finished the week slightly lower, unable to continue building on last week’s rebound.
This is expected, especially considering Bitcoin and the largest cryptocurrencies continue to consolidate. Compared with other notable large- and mid-caps, Bitcoin underperformed.
The Weiss 50 Crypto Index (W50) gained 12.39%, mostly led by established cryptocurrencies other than Bitcoin.
That’s especially clear when we remove Bitcoin from the data. The Weiss 50 Ex-BTC Index (W50X) climbed 18.54% without the King of Crypto’s stagnation weighing it down.
Breaking down this week’s performance by market capitalization, we see that mid- and large-cap cryptocurrencies left the small-caps behind. This is likely because traders are awaiting confirmation on whether or not the bull market is intact.
The Weiss Large-Cap Crypto Index (WLC) rose 11.31%, reversing a downtrend early in the week.
The Weiss Mid-Cap Crypto Index (WMC) increased 11.85%, barely managing to outperform the large-caps.
Small-cap cryptocurrencies were the sole losers this week, with the Weiss Small-Cap Crypto Index (WSC) shedding a minimal 1.23%.
While the larger and mid-sized cryptocurrencies booked decent gains and were able to stage a comeback, there is still a long way to go before they approach their previous highs.
Smaller crypto assets barely tracked lower and were able to erase losses at the beginning of the week.
This reaffirms that altseason and the rise of riskier cryptocurrencies are on hold until Bitcoin and the large-caps can catalyze the bull market’s second phase.
We could still see explosive action with altcoins in the future, but most traders are looking for market confirmation before entering again.
Notable News, Notes and Tweets
• Pomp emphasizes excitement for the Bitcoin 2021 conference in Miami.
• Payment processor Square Inc. (NYSE: SQ)’s CEO Jack Dorsey is considering offering a hardware wallet for Bitcoin.
• Over 300 companies, including Alphabet Inc. (Nasdaq: GOOGL) and Alibaba Group Holding Ltd. (NYSE: BABA), are applying for crypto exchange licenses in Singapore.
What’s Next
While altseason is likely no longer upon us for the time being, it’s just a matter of time before the second phase of this bull market causes another rise in altcoin speculation.
Gas prices for Ethereum have dropped tremendously after the altcoin outflows drove them to new heights, and boring periods in crypto are often followed by wild movements.
The latest negative price action driven by Elon Musk doesn’t change Bitcoin’s strengthening fundaments or its surging institutional adoption. While it could continue to trade range-bound for some time, retaking the traditional longer-term technical bull market support levels could spark a major rally.
Best,
Sam
