The past week on the crypto market has been marked by sideways movement, with no clear trend. The price of Bitcoin, the largest cryptocurrency, fell by about 2%, while Ether, the second-largest cryptocurrency, rose by approximately 2%. The total market value of other cryptocurrencies (excluding major stablecoins) decreased by around 2%.
As Ether outperformed both Bitcoin and the broader crypto market, the ETH/BTC ratio increased by about 3%. For the same reason, Bitcoin's dominance fell by roughly 1%.
Within the altcoin market, there was a rotation of capital between different sectors of the crypto market. This led to both sharp price increases and decreases throughout the week. In Kvarn X's trading service selection, the top weekly gainers were AAVE (+46%), XDC (+28%), and DYDX (+22%). The biggest decliners were EGLD (-18%), EOS (-18%), and FLOW (-17%).
Market Commentary
As reflected in the week's key figures, the past week has been marked by sideways movement, with both Bitcoin and the altcoin market digesting the steep gains of previous weeks.
We have seen Bitcoin surpass the magical $100,000 mark. However, these surges have so far been short-lived, followed by drops back to the $95,000 range.
Over the past week, we also observed two major sudden drops caused by the liquidation of leveraged positions. The first one primarily affected Bitcoin, while the second hit the altcoin market.
Despite the recent sideways movement, it's worth noting that Bitcoin continues to make higher lows. Therefore, we do not yet see signs of a break in the upward trend.
The OTHERS/BTC ratio has also remained on an upward trajectory, despite volatility from liquidation events, which we interpret as a sign of continued optimism in market sentiment.
In summary, after a significant rally, the market appears to be in consolidation. However, there are no convincing signs of a trend reversal. Our current assumption is that after the consolidation phase, the most likely direction for the next move would more probably still be upwards.
Alt-Season: Momentum Tracking
In last week's Pulse newsletter, we wrote about the beginning of alt-season. We stated that while alt-season generally benefits all altcoins, careful token selection remains important.
One key feature of alt-season is the rotation of capital between different sectors of the crypto market. As seen in the key figures presented earlier, capital flows to the most interesting sectors and narratives, leading to significant price increases for some tokens while othersmay remain stagnant or even decline.
How can one stay ahead of the rotation?
One simple tool for evaluating a token's momentum is to compare its price performance against the TradingView ticker OTHERS, which represents the total market value of smaller altcoins. This ratio indicates whether the token's price is rising slower or faster than the altcoin market on average.
A momentum-focused crypto investor might require a token to outperform the market average within the desired timeframe as a criterion for investment.
This analysis can be applied to the so-called "dino coins," which surged a couple of weeks ago. Many investors were surprised to see older projects like Cardano (ADA), Algorand (ALGO), and Stellar Lumens (XLM) among the top gainers.
Comparing these "dino coins" against the OTHERS ticker reveals that their momentum peaked in early December and has since fallen slightly behind the broader altcoin market's performance.
This suggests that these older tokens' momentum may have started to fade, and their prices are moving upward only due to the general market rise.
Momentum-focused traders may consider whether to remain invested in these tokens, cash out profits into fiat currency, or allocate them to sectors with stronger momentum. Alternatively, they could return to these tokens if they show faster growth than the market.
This is just one example of tracking momentum. For those looking to utilize momentum in their crypto trading, we suggest to keep two points in mind:
- Momentum in the crypto market can shift quickly and requires constant monitoring. Following it also requires active trading and reallocation, which, while demanding, can yield better returns than the general market trend.
- The above method only tracks a token's relative momentum within the crypto market. No amount of internal market momentum can protect against price declines in dollar terms if the overall market trend reverses. Successful trading requires both good token selection and an accurate assessment of the general market direction.
With these insights, we leave readers to follow the fascinating developments in the crypto market as Bitcoin consolidates just below all-time highs. We’ll return next week with another edition of the Pulse newsletter, so stay tuned!
New Tokens on Kvarn X
Kvarn X offers one of the most extensive selections in Europe, continuously expanding its list of interesting cryptocurrencies and tokens. With over 160 different cryptocurrencies already available, our platform uses industry-leading trading technology to provide access to over 40 marketplaces and exchanges globally, selecting the best liquidity providers for our customers, from individual investors to institutions.
At the end of October, we expanded our selection by over 30 new tokens. Explore the latest additions on our website:
https://www.kvarnx.com/en/content/new-tokens-and-cryptocurrencies-for-october
Ideas for Building a Crypto Portfolio?
If you're wondering how to build a crypto portfolio or how to get started with crypto investing, we offer various theme-based examples in this section as ideas for constructing your portfolio. Please note that nothing in this newsletter constitutes investment advice or should be interpreted as an encouragement to make investment decisions.
Theme Idea: GameFi
GameFi combines gaming, blockchain, and decentralized finance. By integrating crypto tokens, players can own digital assets earned or acquired in-game, creating economic incentives.
Example of a GameFi-Themed Portfolio in Kvarn X:
- Immutable X (IMX)
- Gala Games (GALA)
- Beam (BEAM)
Stay tuned for more portfolio-building ideas in upcoming newsletters!
The material contained in the Kvarn Pulse is produced solely for the purpose of marketing communication. Any information conveyed through Kvarn Pulse should not be construed as an offer or an invitation to make any purchase or sale decisions, or as an encouragement to make investment decisions about any investment object. Copying or borrowing the content of the newsletter without Kvarn's express permission is prohibited. The information presented in the newsletter pertains to the situation prevailing at the time of writing, and the information may or may not have changed. Kvarn Capital Oy does not guarantee the accuracy or completeness of the information contained in the newsletter or referred to in the newsletter.
