The last week in the cryptocurrency market has been interestingly mixed. The price of the largest cryptocurrency, Bitcoin, fell by about two percent. In contrast, the price of the second-largest cryptocurrency, Ether, rose by about seventeen percent, and the total market cap of the rest of the cryptocurrency market (excluding the largest stablecoins) increased by about fourteen percent.
Due to Bitcoin’s clearly weaker performance compared to the rest of the market, Bitcoin dominance fell over five percent (about three percentage points) in a week. The weak performance of Bitcoin, combined with Ether’s stronger-than-average performance, lifted the ETH/BTC ratio, which had been in decline for a long time, up by nearly 19 percent.
Within the cryptocurrency market, there was an interesting divergence between different sectors, with some tokens experiencing very strong price increases and others seeing significant declines. Among the tokens on the Kvarn X trading platform, the strongest weekly increases were seen in Stellar (+106%), Ethereum Name Service (ENS, +94%), and Sandbox (SAND, +76%). Meanwhile, the sharpest weekly declines were seen in meme coins that had risen sharply in previous weeks, such as BONK (-18%), POPCAT (-16%), and FLOKI (-14%).
Crypto Rally Condolidates
The strong uptrend in the cryptocurrency market, which began with the U.S. presidential election, reached its current peak last weekend, when the price of the largest cryptocurrency, Bitcoin, rose close to the $100,000 threshold.
After being rejected just below this psychological barrier, Bitcoin's price fell to around $91,000 between Monday and Tuesday, only to quickly climb back above $95,000 by Wednesday.
As Bitcoin takes a momentary breather, we can also pause to note that its price rally since the November U.S. presidential election has been nothing short of spectacular. The monthly chart illustrates the leap Bitcoin's market cap has made during November 2024.
Bitcoin's market cap has risen by about $500 billion in November, roughly equivalent to the total market capitalization of oil giant Exxon Mobil. Another way to conceptualize this leap is to note that Bitcoin's market cap has grown in a few weeks by more than its total market cap was just four years ago.
This week, it has also been interesting to observe how resilient the altcoin market has been during Bitcoin’s correction. The oft-repeated rule of thumb in the crypto market, “Bitcoin sneezes, alts bleed,” did not hold true this time. Instead, as Bitcoin’s dollar price declined after the weekend, the altcoin market did not weaken but even strengthened slightly against Bitcoin.
We believe this phenomenon is worth noting. The resilience of altcoins during a correction may indicate that investors are beginning to have renewed confidence in the altcoin market. Within the cryptocurrency market, capital may no longer immediately flee altcoins to Bitcoin’s “safe haven” when dollar prices dip.
This brings the possibility of the “alt-season,” which we discussed in last week’s Pulse newsletter, significantly closer. If crypto investors begin to trust the altcoin market during dollar price declines, they are typically even more confident when dollar prices rise.
What’s Next?
After a sharp uptrend, a steep correction, and a recovery, the natural question arises: what’s next? The movements in the cryptocurrency market over the past week allow for various interpretations.
First, it should be noted that Bitcoin still has only rising bottoms (higher lows), so there is no evidence of a break in the uptrend.
On the other hand, the recovery seen on Wednesday may, in many eyes, look like a “dead cat bounce” and not yet inspire confidence that the $100,000 level, which served as insurmountable resistance last weekend, will be broken anytime soon.
November’s rally was very strong and pushed many indicators into overbought territory. Therefore, the most likely scenario seems to be that the rally will need some time to cool down, with the price moving closer to $90,000 than $100,000 in the meantime. However, the post-election rally has exceeded many expectations, so it would not be surprising if it continues along the same path.
As previously noted, altcoins have so far held up remarkably well. However, we believe that market risk appetite can still be interpreted by monitoring the OTHERS/BTC ratio.
As long as this ratio remains upward, market sentiment can be interpreted as fairly positive, and the risk of larger corrections is lower. If downward price movements occur, the dips they form are likely to attract buyers quickly, as seen in recent days.
However, it should be noted from the above graph that the rise in the OTHERS/BTC ratio has clearly slowed, as evidenced by the Relative Strength Index showing two “bearish divergences.” If this ratio begins to trend downward, it may indicate a temporary cooling of market sentiment, and the likelihood of downward movements should be considered higher.
For clarity, we note that the OTHERS/BTC ratio can also decrease if Bitcoin's price starts rising faster than altcoins. In such cases, the inflow of new capital into the sector via Bitcoin often bodes well for altcoins shortly afterward.
It is also good to keep in mind that the drivers of recent market euphoria have been primarily political changes in the United States. A lot of expectations have been placed on this within the cryptocurrency market.
We still know very little about the new president and his administration’s actual measures regarding the cryptocurrency sector, and no concrete evidence will be available for at least two months. Market sentiment is currently driven largely by election promises, hints, and rumors.
If expectations regarding the new administration’s crypto policies shift, either positively or negatively, prices are also likely to move accordingly. At the moment, it seems that the markets have priced in the most optimistic scenario, but there may still be room for further upward movement. Crypto investors may therefore do well to follow U.S. news exceptionally closely in the coming weeks.
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: Decentralized Finance (DeFi)
Decentralized Finance (DeFi) is one of the most exciting and practical application categories in the crypto sector. DeFi protocols enable activities such as borrowing and lending without intermediaries or trusted third parties. Replacing financial intermediaries with blockchain technology opens up potential for significant efficiency gains, and decentralized finance is seen as one of the most promising application areas in the crypto sector.
An example of a DeFi-themed crypto portfolio curated from the Kvarn X service offering could include:
- Uniswap (UNI)
- Aave (AAVE)
- Jupiter (JUP)
- Maker (MKR)
More theme ideas for building your portfolio can be found in future editions of the Pulse newsletter!
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.
