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Over the past weekend, the broader crypto market experienced a slight dip after a relatively cheerful week of positive price actions. BTC attempted to establish a firm foothold above the $41k support through the market-wide dip, but ultimately failed to do so. In the early hours of Monday (Asian trading hours), BTC saw two consecutive wicks penetrate its $41k support. As of the time of writing, the largest cryptocurrency by market cap is consolidating losses above the $40k psychological barrier after shedding 2.5% of its market value in the past 24 hours. Fortunately for BTC, this may not necessarily spell an end to its recent uptrend, as the chance of BTC finding bids near the $40k support zone remains high. These sudden dips within the past few hours are likely to be downside corrections that have followed BTC's failed attempts to clear the $42.5k resistance. However, said downside corrections may be extended to test the $40.5k support if BTC fails to clear the overhead resistance near the $41.2k level.
In a similar vein, ETH is consolidating above the $2,800 level after posting a 2.9% loss from 24 hours ago. Most major altcoins have also flipped red with the exception of LUNA, which managed to sustain an impressive 2% gain amidst a sea of red. Despite the general gloom currently dominating the altcoin market, some datapoints are still suggesting that once BTC defines the near-term market trend, market participants will likely look to alternative assets within the ecosystem for higher returns. As can be seen from Swissblock's Altcoin Cycle Signal Chart, the movements of major base assets like BTC and stablecoins usually signal the beginning of capital rotation into ETH and major altcoins. As BTC is currently still figuring out its next direction, this is one chart that we should definitely keep a close eye on.
Meanwhile, on-chain metrics reveal that addresses with less than 10 BTC holdings are still accumulating aggressively, whilst the BTC exchange supply has also been consistently dwindling. In fact, said BTC exchange supply is now down to its lowest levels since December 2018, suggesting that a BTC supply shock may very well be on the cards in the near-term.
While spot trading has remained relatively light, BTC's rise and fall over the past weekend were largely propelled by leveraged positions within the derivatives markets. BTC's abrupt downside correction to the $40.8k level after hitting the $42.2k mark just two days prior can be partly attributed to leveraged traders getting carried away by euphoric sentiments. In the options market, BTC's implied volatility (IV) has flipped from Backwardation to Contango after the FOMC meeting. Given the context of the U.S. Federal Reserve's stance on rate hikes, the short-term options will likely see a further drop in IV.
Yuga Labs, the creator of the very popular Bored Ape Yacht Club (BAYC) NFT collection, recently gave its community a sneak peek into their new project titled "Otherside". The trailer, captioned "See you on the Otherside in April", alludes to a new project powered by ApeCoin that will focus on "culture, gaming, and commerce" — one that seeks to create a gaming-centric virtual world that is compatible with different types of popular NFTs. The trailer, which was released shortly after the launch of ApeCoin, further piled onto the hype surrounding Yuga Labs' plan to take the BAYC label to the next level. However, it did little to salvage the falling APE price, which has shed 12% of its market value within the last 24 hours. Price movements aside, this is still a project that we should definitely keep a keen eye on, as they seem to have many exciting things in store for us in 2022!