Crypto market capitalization: $3.09 trln (+0.67%)
Dominance: BTC – 58.9%, ETH – 12.2%
Fear and Greed Index: 83 (Extreme Greed) vs. 83 in the previous session
Bitcoin logged robust performance over the past week, up about 14% as the Trump-fueled momentum trade decelerated towards the weekend. The top crypto currency has been hovering in a narrow band between $89 and 91.5k over the past couple of sessions. Ethereum also ended the week on a sluggish note, with rangebound trading north of the $3k mark as both volumes and price action were in decline for the second-most valuable crypto coin.
Last week’s news was not encouraging for spot BTC ETFs, as outflows totaled $400.7 mln, in the third-worst weekly performance since their January launch. In our view, this trend was most likely attributable to profit-taking as traders opted to cash out after the big bull run that was unleashed in the wake of Trump’s election victory.
In recent days, and especially over the weekend, a new trend appears to be shaping up on the cryptocurrency market. As BTC and ETH experience a slowdown in dominance and price action, the whales are starting to funnel money into altcoins, some of which saw an upturn over the weekend. XRP went on a roller coaster ride on Saturday, up a whopping 40% for an intraday high around $1.23 before retracing below $1.20 later in the day. The altcoin pumped and dumped amid heightened volatility on Sunday and was up 14% at the time of writing on Monday morning. To remind, before the SEC stepped in with litigation against Ripple in 2020, XRP was the second-most valuable cryptocurrency asset (ahead of ETH), trading above $300. Gensler looked at ETH, said it was alright, then set his sights on Ripple, and decided to sue it. Consequently, ETH trended higher while XRP was beaten down. As Ripple CEO Brad Garlinghouse noted in a recent interview, this is not how the market should work – when the government picks the winners and losers. But now the tide is turning as the market sees a chance that an even playing field will be restored as this optimism translated into the gains that followed Trump’s victory and then got another boost amid rumors that Gensler will step down after what sounded like his resignation speech on Thursday, as we noted in our Friday overview. Ripple’s token traded at an ATH of $3.84 in 2018, so assuming that it retraces to that high and rallies above it, there can be little doubt that this altcoin still has a long run-up ahead. In value terms, XRP is currently trading about 2x below its ATH market cap of $130.8 bln, while the current price action is nearly 3x below the ATH, a key indicator also pointing to powerful upside ahead.
As a matter of fact, the market was abuzz with rumors over the weekend that a mini-alt season is coming up. The reason for this is that the whales have started to rotate into altcoins and even random alts. Solana saw a big pump, up 10.3% on the day and almost 18% on the week. At the time of writing, the coin was trading at $243. Cardano (ADA) was also a strong outperformer, up over 11% on the day and up from $0.57 on Monday to $0.77 as of writing. As noted previously, the key upside driver for this altcoin is news that president-elect Donald Trump and the Department of Government Efficiency (D.O.G.E.) to be headed by Elon Musk are reportedly mulling the option of a blockchain-based federal voting system, with Cardano, X, Hyperledger, and Hedera pegged as potential contenders in this project.
Diversification of the whales also means that liquidity is being pumped across altcoin chains, so big moves are also being seen in the likes of Jupiter (a decentralized exchange aggregator on Solana) and Raydium (an automated market maker (AMM) built on the Solana blockchain that shares liquidity with the Serum decentralized exchange).
Thus, over the coming week, watch for big moves in XRP, Solana, Cardano and the ecosystems surrounding altcoins. Meme coins have stalled, and we assume that the whales may be moving out of selected memes and into alts.
The next key driver for many of these plays will be the release of Nvidia’s financial results on Wednesday. We think the XRP army will be out in full force even if this report disappoints, as XRP is still right in the middle of catch-up trade momentum. Other crypto names to watch for include Cosmos, Polygon and Fantom. Gaming plays and chains could also start tapping into the current trend.
Technical analysis
BTC broke out of a 3-year cup and handle pattern following a long consolidation and correction. Based on the depth of the handle, the price action should reach $98-100k in the short term. This level remains our YE 2024 price forecast. Our longer-term outlook, over the next six months, reflects the depth of the cup formation, with an upside target of $130k. That said, amid the current flat trend, Bitcoin looks overbought in the short term, meaning that we could see a pullback to the neckline of the above pattern at $74k. We advise investors to buy these dips as such opportunities could be rare or even non-existent once the 6-digit level is firmly breached.