Something about BTC, ETH, SOL and LUNA after a double-digit decline
Despite the strength of traditional financial markets, the crypto market has seen a widespread sell-off. Total crypto market cap is down about 13.5% from $ 2,950 billion on Nov. 10 to currently $ 2,572 billion.
Total market capitalization for cryptocurrencies | Source: @Remi_Tetot
The US dollar index (DXY) versus a basket of other currencies is at its highest level since July 2020. A stronger US dollar could contribute to easing pressure on all assets.
“It is important to remember that an 8% decline is considered a normal move in the crypto market. The sudden drop in prices that causes a shift in leverage contributes to a healthier market that is better positioned to continue an uptrend in the medium term. Bitcoin is also coming under some downward pressure from macroeconomic conditions, including a strengthening DXY, so investors can expect more volatility and a deeper correction in the short term, ”said Mikkel Morch, managing director and risk manager at ARK36.
According to data from Coinglass, there has been a BTC liquidation of $ 274 million in the past 24 hours. Almost all of these liquidations were long positions that pushed the price down when the positions were closed, creating increased selling pressure.
The crypto industry has a lot of leverage and instant settlement, which explains the volatility of the underlying assets. While high volatility is a problem for investors, short-term price action and fundamentals do not always go hand in hand.
The need for a censorship-resistant, highly secure, transportable, fungible and reliable store of value in the current macroeconomic landscape remains unchanged.
“The real exchange rate remains near historic lows and inflation is likely to accelerate rapidly due to an increase in short-term yields. The hunt for profits will continue unabated and therefore BTC has good support with 60,000 US dollars, ”wrote Martha Reyes, Head of Research at BEQUANT.
The Hash Ribbons indicator introduced by Charles Edwards has yet to send a sell signal. The popularity metric appears to be as good as it was at the beginning of the year when BTC was trading in the $ 30,000 area.
Bitcoin Price Chart | Source: @Luna_UST
The ETH price fell as low as $ 4,108 today. Despite the flash crash, ETH fundamentals and short-term price movement, similar to BTC, were not always consistent.
Total Locked Value (TVL) on Ethereum continues to rise, non-zero wallet addresses reach new all-time highs (ATH), ETH is burned because of the London hard fork, Ethereum is merging with Proof-of-Stake-Chain (POS), celebrities are paying hundreds of thousands of dollars for NFT, developers continue to bring innovative products to market and activities at Ethereum continue to be in a long-term upward trend.
According to data from Glass knotIn the midst of the sell-off, the share of the ETH offering on centralized exchanges (CEX) fell sharply. While it cannot be concluded whether this was due to the CEX moving funds or whales depositing ETH into cold wallets for long-term holding, it could be evidence of active dip purchases.
ETH, which is held on the CEX, officially hit its lowest level since May 2018 and that was before around 7% of the staking offer was blocked.
Amount of ether held on exchanges | Source: Glassnode
SOL traded at an intraday low of $ 211.3 just a week after the project’s breakpoint event in Lisbon, Portugal.
The event highlights some of Solana’s great achievements over the past year, including the growing number of projects and developers contributing to the blockchain, increased use of phantom wallets, high NFT sales, abundant capital in the ecosystem, and more.
NFT sales on the Solana network | Source: Messari
Critics often criticize the lack of decentralization and the cost of running validators on the Solana network, but there are now 1,200 active validators and it’s growing steadily.
The number of active wallet addresses and transaction fees has risen sharply, which shows a growing network effect. Solana’s market capitalization / TVL ratio is 5.02, making it one of the most luxurious Layer-1s according to this metric. Of course, higher growth often leads to higher prices.
LUNA is among the four assets that have fallen the most, down about 22% from the ATH from $ 54.7 on Nov. 8 to a low of $ 41.31.
The decline comes after the LUNA community agreed to a proposal to burn around 88 million LUNA from the community coffers to mint billions of dollars from their largest stablecoin, UST, to boost liquidity for an upcoming insurance protocol. The amount of LUNA burned is at an unprecedented level, as the following graph shows.
The Terra Ecosystem has over a hundred projects over the next few months that could increase the demand for USTs and result in more and more LUNA being burned.
UST is an algorithmic stablecoin that is only supported by the burning and minting of LUNA / UST. While the decline weighed on investors, the UST did not break its peg as it did in the May crash. This could be due to the amount of “demand”. “Leave the community coffers to mint UST.
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According to Blockworks